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The conveyancing industry at breaking point?

conveyancing

When Chancellor Rishi Sunak delivered the 2021 Spring Budget on 3 March, the property sector listened with bated breath. We were eager to find out what approach the Government would take: would it continue with temporary relief measures to support homebuyers amid the pandemic? Or would it choose to bring these policies to an end in order to focus on tackling public debt?

Of course, the Chancellor opted for the former. Most notably, Mr Sunak announced that the Stamp Duty Land Tax (SDLT) holiday would be extended until 30 June. This means that for three more months, homebuyers are able to take advantage of the tax relief if purchasing real estate in England or Northern Ireland.

Introduced in July 2020, the stamp duty holiday has certainly kicked the property market back into gear, and the extension has fuelled activity further. According to MoneySuperMarket, first-time buyer enquiries increased by 472% in the first week of March when compared to the first week of February. Rightmove also received over 9 million site visits on the day the extension was announced – the highest volume of daily traffic recorded.

This is welcoming news for the Government. After all, the aim of the holiday was to ensure the market was buoyant and there was a boom in transactional activity, which should improve the health of the wider economy as the country transitions out of lockdown. The big challenge now, however, is ensuring that as many buyers as possible can actually complete on their transactions before the holiday deadline.

There is understandably a great of focus at the moment on the delays many buyers are facing when applying for mortgages. However, we should not overlook the strain being felt by those involved elsewhere in the property transaction process – most notably, conveyancing.

Under pressure

In the early months of 2021, it was clear conveyancers were under significant pressure to complete as many property transactions as possible prior to the original SDLT holiday deadline on 31 March. The extension provided some relief, but in reality, this has only delayed the inevitable bottleneck of sales that conveyancers will have to manage prior to end of June.

The effects are already on display. An in-depth analysis of public data by GetAgent.co.uk revealed that the total time to sell a property – from the initial listing to the completion of the sale as recorded by the Land Registry – is now sitting at an average of 295 days. It also noted that while sales are being agreed to, the delays arise at the closing stages of the transaction when the necessary legal work needs to be completed. Suddenly, a three-month extension of the holiday does not seem that long.

As with any line of work, the introduction of high demand and tight deadlines can drastically increase the chances of human error. What’s more, given the number of parties involved in a transaction, delays at one stage of the buying process can lead to frustrations and mounting pressure on other stakeholders. The fallout is significant – in the worst-case scenario, a buyer could ultimately miss out on tax savings of up to £15,000 if their purchase is not completed by the end of the SDLT holiday.

From a policy standpoint, it would make sense to extend the SDLT further or initiate policy so that sales agreed to prior to the 30 June will still qualify for the tax relief, even if the sale is not finalised until after this date. Unfortunately, this does not look like it will be the case.

For conveyancers, then, they must look elsewhere for a solution to the problem. Specifically, they must openly embrace technology to ensure they can streamline existing processes and communicate transparently and effectively with all parties involved in the transaction. By doing so, they will also reduce the chances of human error or unforeseen complications. Fortunately, the adoption of technology by conveyancing firms is not a new phenomenon; it is a trend that had already taken hold prior to the pandemic but has since been accelerated due to Covid-19.

Embracing technology at a time of need

As with large sections of the property industry, conveyancing firms have slowly been coming to realise the benefits of technology in delivering a superior service or achieving efficiency gains. The initial resistance to technology by conveyancing firms was not a stance taken by choice. Rather, I believe it was more of a consequence of these firms simply not having the knowledge.

Yet the pandemic, in preventing human interactions and travel, has driven home the value of technology. For example, eSignatures and automated communication can shave days off a transaction. Client onboarding, which typically takes around two weeks, can now be completed in as little as 40 minutes by embracing digital solutions. 

Taking all this into account, technological innovations like these are permanently transforming how conveyancers function. And the timing couldn’t be better, with the SDLT holiday naturally making it near impossible for conveyancers to meet demand if relying on outdated practices.

All that being said, I call for the property sector to be understanding of the pressures faced by one another at the moment. Every organisation is doing what it can to ensure transactions are completed before the deadline, even with the obstacles posed by the pandemic. That’s why InfoTrack is backing the industry’s ‘call for kindness campaign’, which asks solicitors and conveyancers to be mindful of their peers. We live in extraordinary times, and these coming months are set to be a busy period for everyone.

Overall, buyers and sellers are seeing first-hand just how technology can be used to simplify all parts of their lives. Naturally, these expectations are spilling over into the property and finance sectors. That’s why it is safe to assume that we will be seeing significant investment into technology beyond the SDLT holiday period by conveyancers. Doing so will ultimately serve to benefit the property sector as a whole.

Original Article from Financial Reporter 06/04/2021

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Sales surge after stamp duty holiday extension: Rics

for sale

There was a sharp increase in sales agreed during March, following the chancellor’s extension to the stamp duty holiday, according to the latest index from the Royal Institution of Chartered Surveyors.

A net balance of +50 per cent of the surveyors questioned reported an increase in sales, which is the strongest reading since August last year. 

Respondents are anticipating sales activity will continue to rise over the coming three months, with a net balance of +35 per cent forecasting increases, the most upbeat reading since January 2020.

New buyer enquiries also surged, with a balance of +42 per cent of respondents recording an increase compared to 0 per cent the previous month.

This was the strongest figure since September 2020. 

But the pace of new instructions did not match the jump in interest from buyers, leading to a gap between supply and demand and rising prices.

A net balance of +29 per cent of surveyors reported that appraisals were up on the same period last year, suggesting more new instructions should come onto the market in the coming months.

Meanwhile, +59 per cent of respondents reported a rise in prices over the past month.

Surveyors responses suggest rising prices across all parts of the UK, with the strongest momentum in the North West, Yorkshire & the Humber and Northern Ireland.

This upward trajectory is expected to continue with +42 per cent of surveyors predicting prices will increase over the next three months and +60 per cent saying they will rise over the next year.

In the rental market, +36 per cent of respondents recorded increased tenant demand, up from +26 per cent in February. 

New landlord instructions were down according to a net balance of -25 per cent, resulting in upward pressure on rents. 

A net balance of surveyors +47 per cent expect rents to rise. 

The only part of the UK where rents are expected to remain flat or fall was London.

Rics chief economist Simon Rubinsohn says: “The results show that the decision of the chancellor to extend the stamp duty break and then taper its expiry has had an immediate impact on the housing market with all the key activity indictors rebounding in March. 

“However the headline numbers as well as the anecdotal remarks from respondents clearly demonstrate that across much of the market, demand is outstripping supply and that as a result, prices continue to move upwards.

“More worryingly, this is also being reflected in the price expectations data both at the twelve months horizon and beyond.

“Meanwhile the lettings market is displaying a broadly similar characteristic in terms of the relationship between demand and supply according to theRics data with the notable exception of the numbers for London. 

“Significantly despite rents moving higher, contributors continue to point to the less favourable environment for investors in the market as playing a key role in fuelling this imbalance.”

Wayhome chief executive Nigel Purves says: “While we are seeing a new-found confidence among many buyers and sellers, sadly this just isn’t the case for a large proportion of aspiring homeowners across the UK.

“Even with the stamp duty extension for an extra three months spurring on hopeful home buyers, there are many who find themselves overlooked and ignored due to their household income not meeting a mortgage lender’s criteria. 

“This is despite them already having a deposit saved and being able to afford the equivalent of mortgage repayments in rent each month. More needs to be done to level the playing field and provide people with alternative routes into home ownership.”

Metlife head of individual protection Rich Horner says: “Thanks to the chancellor’s extension of the stamp duty holiday, and the introduction of the 95 per cent mortgage scheme, it’s been another positive month for the housing sector – one that could have suffered severely had the stamp duty holiday ended abruptly.

“In the months ahead, we should continue to see a surge in homeownership, particularly as the new 95 per cent mortgage scheme will make buying a home a reality for more first-time buyers. 

“We’re also seeing more lenders offering their own competitive mortgage deals. “Despite the success of the measures, potential buyers need to be wary of their affordability and ensure they’re not living above their means, particularly as homes up to the value of £600,000 are eligible under the scheme.”

Original Article from Mortgage Strategy 08/04/2021

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Exchanges hit 10 year high with market frenzy set to continue

exchanges

Data from agency Knight Frank suggests the number of UK exchanges last month was the highest in 10 years – well above even the late 2020 previous peak. 

The figure for March 2021 was nine per cent above the second-highest month – December 2020 – and 12 per cent higher than March 2016, when panic buying was going on ahead of the three per cent additional homes stamp duty surcharge.

The records weren’t limited to exchanges, says Knight Frank. 

The number of new prospective buyers registering in March was also the highest in 10 years, possibly encouraged by a deferred stamp duty holiday deadline, while the number of offers accepted in March was also the highest such figure in a decade. March was also the second-highest month in a decade for the number of offers made. Despite social distancing and wariness amongst some to leave their homes, the agency says March 2021 was also the fourth highest month in 10 years for viewings. 

“In broad terms, the strengthening economy and gradual return to normality are playing a key role” explains the agency.

“The UK housing market is in the middle of a perfect storm” according to Tom Bill, head of UK residential research at Knight Frank.

“Sellers who hesitated in the first two months of the year because they were home-schooling or had concerns about missing the stamp duty deadline are now listing their property. Meanwhile, the prospect of summer holidays means a spring surge in activity is more discernible this year, buoyed in many cases by high levels of personal savings accrued over the last year. 

“The successful vaccine roll-out and encouraging economic indicators are providing the mood music” he continues.

For these reasons, he says the surge seen last month is likely to continue until at least the summer.

Original Article from Estate Agent Today 08/04/2021

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South West most popular region for holiday lets

holiday home

Figures from Hodge Bank show that sales of holiday homes near the coast have grown considerably over the past six months with holiday let mortgages for properties in Wales almost doubling since September 2020.

The most popular destination for holiday let buyers is the South West at 39%, followed by Wales at 19% and the North West at 12%.

Welsh purchases have almost doubled since September 2020, increasing from 10% to 19%, with the coastlines around the North, including Pwllheli, Holyhead and Llandudno proving hugely popular for holiday homes.

The data also shows that the average age of a holiday let mortgage customer is 51. And Hodge customers are willing to spend on average £403,143 on a holiday home – nearly two thirds higher than the average house price in the UK of £252,000.

Of those purchasing a holiday home, 35% re-mortgage their existing home to finance their holiday home while 65% take out a new holiday let specific mortgage.

Newquay, St Ives and Penzance in Cornwall are the most popular beach resorts.

Over the past six months, Wales has risen in popularity, especially around the north West in Pwllheli, Holyhead and Rhosneigr. Devon also holds a lot of appeal, with the likes of Bideford, Ilfracombe and Barnstaple proving popular.

The least popular regions with only 1% of purchases are Greater London and the East Midlands, with West Midlands and the South East at 2% for those buying holiday lets.

Emma Graham, business development director at Hodge, said: “Many people have not been able to holiday abroad for more than a year now and staycations have therefore become hugely popular. We think this has almost certainly led to people re-evaluating their finances, as well as holiday plans and the holiday let market is looking very healthy.

“Given the appetite for a holiday by the sea, it’s no surprise that homes near the beach or coast are the most popular for holiday homes. In 2019, Hodge launched a mortgage designed for those wanting to own a holiday let property in the UK after seeing an increase in enquiries. We saw a gap in the holiday let mortgage market for a customer-friendly product that allows owners to stay at the property for a longer period, as well as the ability to use letting sites.”

Original Article from Best Advice 28/03/2021

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Another government green-scheme bites the dust

green scheme

Over the weekend, and just six months after its launch, the government ditched its flagship green homes grant scheme.

The £1.5bn scheme was set up to offer grants to households of up to £10,000 to install insulation or low-carbon heating. Although applications in progress will be completed, no new apllications will be taken after the end of March.

The scrapping of the green grant means that the tens of thousands of jobs it was expected to generate will no longer come about. In fact there are reports that building companies have actually laid off staff due to the problems that encountered in dealing with the red-tape of applications and installations.

The demise of the scheme comes six years after the ditching of the ‘green deal loan scheme’, that was supposed to be a ‘transformational’ change and the ‘biggest home improvement programme since the second world war’.

And that itself was just another ‘flagship policy’ that bit the dust. The government’s track record is littered with failure in tackling carbon emissions. They have ended onshore windfarm subsidies, cut solar energy subsidies, and scrapped plans to make all new UK homes carbon-neutral.

With the UK hosting Cop26, the UN climate talks, in November, the demise of the latest scheme has been described as ‘an embarrassment’ and ‘a disaster in terms of the U.K. getting on track to net zero’ carbon emissions.

As with so many government initiatives the green grant scheme has promised much and delivered relatively little. By the end of February there were over 123,000 applications for the grants but just 28,000 vouchers were issues and only 5,800 energy efficient installations made.

The Environmental Audit Committee of MPs last week declared that the implementation of the scheme had been ‘botched’ and the administration of it ‘seems nothing short of disastrous’. An urgent overhaul of the scheme was recommended but it seems that the effort of doing so was too much for the government to swallow – hence the scrapping.

It is estimated that the ending of the scheme leaves around 20 million less-well-off households without any source financial help to reduce greenhouse gas emissions. Draughty homes alone are said to be contributing around 14% of carbon emissions.

The government has said that an extra £300m will be earmarked for helping people on low-incomes gain access to energy efficiency improvements.

Kwasi Kwarteng, the secretary of state for business and energy, said on Saturday:

“Upgrading the country’s homes with energy efficiency measures means we can cut emissions and save people money on their energy bills.

“Today’s funding boost will mean even more households across England are able to access these vital grants through their local authority.

“This latest announcement takes our total energy efficiency spending to over £1.3bn in the next financial year, giving installers the certainty they need to plan ahead, create new jobs and train the next generation of builders, plumbers and tradespeople.”

Given that last summer the headline figure for greening of homes was trumpeted as being £2.5bn it is a little hard to see how taking a hatchet to the budget can be described as a ‘funding boost’.

Original Article from Property Industry Eye 29/03/2021

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The factors that are to blame for conveyancing delays

delays

It has been a year since the country entered its first lockdown, a milestone none of us could have envisaged back then. It also marks what was the start of one of the most tumultuous years the property market has ever witnessed.

From the initial drought that the first lockdown brought, to the flooding of the market in July post-lockdown, all aspects of the industry whether they be estate agents, conveyancers, or lenders have had to demonstrate flexibility.

Since the start of the first lockdown, the Council for Licensed Conveyancers has been regularly surveying our regulated community to see how the firms we regulate are managing and adapting through this period. It has also provided snapshots of how the wider market has been performing. In November we provided an overview of how the industry had fared over the previous eight months. Now, a full year on, what are the continuing effects of the pandemic?

As we are all very aware, the much-vaunted Stamp Duty holiday had the desired effect of boosting the property market, to the brink of collapse if you’d believe all the media hype around it. While it is true that that market did quickly become flooded overnight, our experience of speaking to our firms, in November, showed that less than half (46%) told us that they had to turn work away.

More recently, the backlog of transactions, in part, prompted the Chancellor to extend the holiday until September, a move welcomed by the industry. In November, 78% of our firms were concerned about a steep drop off in work come the end of March and said they would welcome a phased exit from the SDLT holiday. So, has this phased exit helped eased case-loads?

In our latest survey, which ran in February, just 41% of firms said that high caseloads are causing matters to take longer than usual. In fact, just over three quarters (76%) of our firms told us that it is delays arising from the impact of the pandemic on third parties such as local authorities and HM Land Registry that are causing delays. While 65% of firms told us that lender response times are also contributing to delays.

22% of firms surveyed said their current levels of work are at 100-125% of the level in February 2020, with 17% of firms saying work levels were at more than 126% of the February 2020 levels. These increases appear modest. We always encourage firms to be mindful of the levels of work they take on, to ensure that it isn’t more that they can manage, and the data seems to be bearing this out. We hope that the tapering effect of the SDLT extension will also allow firms to more effectively manage their workloads, and reduce risk.

In November when we spoke to firms about their financial situation, 42% had used the Coronavirus Business Interruption Loan Scheme, with the highest proportion being those with a turnover of £1-3m and £3-5m where 67% and 75% respectively had utilised the financial aid. When we spoke to the same firms again recently, 61% said their debt levels were now unchanged from this time last year, 23% said their debt levels are currently higher, but 10% said they were actually lower.

Seemingly, stronger financial positions alongside a more gradual withdrawal of the SDLT holiday have contributed to an uptick in industry sentiment. A very heartening 93% of our firms told us that they feel very or quite confident now about the future. This is certainly good news, and really quite telling. This is an industry that has had to adapt very quickly and demonstrate flexibility and innovation in order to not just survive but thrive.

In November, we said that the industry has much to be proud of in its handling of the crisis to date, a statement we stand by as estate agents, conveyancers and lenders alike have shown resilience in their navigation of the crisis to date.

The survey ran from 14 to 28 February and asked conveyancers about their work in the week ending Friday, 5th February. 150 firms participated.

Stephen Ward, is Director of Strategy and External Relations at the Council for Licensed Conveyancers.

Original Article from Property Industry Eye 29/03/2021

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Many transactions ‘taking four months from offer to exchange’

NAEA Propertymark says a record number of transactions are taking four months to move from offer to exchange.

The organisation says this was one of the key reasons why it campaigned for the extension of the stamp duty holiday which was – until recently – scheduled to end tomorrow.

In February, the latest data available, the number of property transactions taking over 17 weeks from the offer being accepted to exchanging contracts, increased again to 27 per cent from 26 per cent the previous month – the highest figure on record.

Mark Hayward, chief policy adviser at Propertymark, says: “It’s interesting to see that one in nine properties sold for more than the original asking price in February. Over the past few months, we’ve witnessed a boom in the number of prospective buyers and the number of sales taking place following the government’s announcement of a stamp duty holiday, and so it seems many buyers are willing to pay over the asking price in order to secure their dream home.

“We are also seeing a record high for the number of transactions taking more than 17 weeks from the offer being accepted to exchanging contracts due to this unusually high demand for property. This is one of the reasons we campaigned for an extension to the stamp duty holiday; to prevent sales falling through due to delays in the chain.”

Data from Propertymark also suggests that in February one in nine properties sold for more than the original asking price. This is the highest figure recorded since August last year and the highest figure on record for the month of February since 2016. Some 57 per cent of properties sold for less than the original asking price.

The number of sales made to first time buyers rose to 25 per cent in February, from 23 per cent in January; this was the highest figure recorded since July 2020 and year-on-year is an increase from 22 per cent in February 2020.

In terms of demand, in February the average number of prospective buyers registered per estate agent branch stood at 388, a 20 per cent decrease from 487 in January. However, this is the highest figure recorded for the month of February since 2017, when the figure stood at 425.

On sales, the average number of sales agreed per estate agent branch stood at 11 in February, an increase from 10 in January.

Year-on-year, this figure is up from nine sales agreed per estate agent branch in February 2020 and seven sales agreed per estate agent branch in February 2019.

The average number of properties available per member branch stood at 34 in February, falling from 38 in January.

Original Article from Estate Agent Today 30/03/2021

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Moving Home in Chelmsford: Who Should I Notify?

moving home

Moving home can be the wonderful fresh start you need. A new place, new location, new neighbours and new friends we just haven’t met yet. You may have got all the financials in place, instructed the lawyers and got the removals company all booked in.

But wait! Who needs to know you are moving home in Chelmsford and why?

Here, we at Essex Homes And Lettings identify some of the people and organisations you should be notifying about your move. And don’t forget, we can help you create a list if you need a little bit of extra help.

1. Don’t Bank on Them Knowing!

Financial institutions, such as banks and building societies, should be informed as soon as you can. The same goes for pension companies or credit card providers. Firstly, their paperwork has to be correct, and they often use it as a security check – think of how you get a new bank card or PIN numbers. Secondly, imagine if your bank details and personal finance arrangements are sent to the wrong address and end up in the wrong hands.

Top Tip: Take time to write a list of organisations you bank with or have some sort of financial agreement with. Do this when you’re moving home and try to keep it updated as it’ll save you time in the future.

2. Motoring Into the Future

Driving off to a new home? Make sure the Driver and Vehicle Licensing Agency are kept informed once you’ve moved. They need to have the correct address for you and your licence, and for your car.

Top Tip: The DVLA is one of many government organisations, such as HMRC, who will need to know your new address. Think about other governmental organisations who have info about you and make sure they all know the changes.

3. Power to the Utility Providers

You will have been paying for your gas, water and electricity bills, and it might be that when you move, you’ll have new suppliers. Make sure your old suppliers have updated details for the property you have moved out of – after all, you do not want to be paying someone else’s bills. Remember to update your TV licence and TV companies too.

Top Tip: Don’t forget to take your meter readings when you move so that you are billed for what you have used, and no more.

4. A Health Checklist

Whether you have a medical condition or are as fit as a fiddle, you will have a doctor and the GP surgery where you are registered must have your updated details on file. This goes for the dentist too, and the optician, and any other medical services provider to whom you are registered.

GPs often use addresses for identification purposes too, so it’s a security requirement as well.

Top Tip: Communicate with your medical providers as soon as you can. You don’t want important letters going to the wrong address.

5. Education and Employment Matters

These two areas are aligned as education and employment are often linked. It’s a good idea to deal with them together, so you don’t forget. Schools, nurseries, training providers, and employers all need up to date information as they will all need a record and be able to communicate with you via letter if they need to.

Top Tip: Group your thinking together. There’s less chance of missing something then.

6. Council Tax

Love it or hate it, we all have to pay council tax on the property in which we live. Worked out by several factors and set by the local council, it’s vital that you pay what you need to pay. If you don’t let the council know you’ve moved, you might get a notice to pay for a property that is no longer yours.

Top Tip: There are various ways to contact your local council with your new details, from phone to live chat to email. Whichever method you choose, it a priority to let them know.

You might also want to let family and friends know – or you might not if you’re having a fresh start!

We hope this gives you a clearer idea of who you need to notify! Still looking for the perfect property in Chelmsford? Call our team on01245398466 or email sales@essexhomesandlettings.co.uk, and we’ll get the conversation started.

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Sellers moving into rentals to break property chains: Rightmove

Rightmove

A growing number of home sellers appear to be moving into short-term rentals in order to put themselves in a stronger position as chain-free buyers.

Figures from Rightmove show that the proportion of properties listed as “chain-free” on the site has increased from 15 per cent a year ago to 21 per cent now.

 In February the number of buyers searching for properties with “no chain” in Rightmove’s keyword sort tool was 72 per cent higher than in February 2020 in the rush to cash in on the stamp duty holiday before March 30 when it had been originally set to finish.

The trend is most defined in London where the percentage of chain-free homes has jumped from 12 per cent this time last year to 21 per cent now. 

Rightmove points to corresponding strong growth in rental demand of over 40 per cent in the neighbouring regions of the South East and South West as some people choose to sell up and rent outside of the capital.

There are also some landlords selling up in the capital due to falling rents.

Some may be trying to take advantage of the stamp duty holiday to improve their chances of getting a good price

Rightmove director of property data Tim Bannister says: “We know that one of the reasons sellers are often hesitant to come to market is because they can’t find somewhere that they want to buy, but with record buyer demand and the stamp duty holiday being an added incentive for prospective buyers there seems to be a group of people who are choosing to sell up now and rent temporarily.

“The flexibility of renting gives people the chance to ‘try before you buy’ in a new area and so those who have chosen to move to the countryside may be selling their house chain-free to then rent and take time to decide if the good life is definitely for them.

“Selling chain-free is perhaps something some owners hadn’t considered as a possibility before now, but with the competitive market and stock shortage we currently have they’re trying to put themselves in a more attractive position when their dream home comes along. 

“In the capital there are also some landlords who are selling up now, which could open up an opportunity for some first-time buyers looking for their first home.”

Chestertons chief executive Guy Gittins says: “Over the past year there has certainly been a marked increase in the number of people that are selling without an onward purchase through our London offices. 

“One of the most common reasons is that the family house market is incredibly competitive in London and many sellers are willing to break the chain in order to become chain-free buyers and place themselves in the best position to secure a property when the right one comes up. 

“With many people now working from home, these sorts of buyers have more flexibility in where they live in the short-term, and many are choosing to move back with family temporarily, or even moving further out of London for the short-term.

“There are a number of other reasons as well, including a number of landlords selling their buy-to-let investments due to falling rents, second home owners deciding to cash in on some of the additional value that has built up in their property, and sellers making their property more attractive to buyers who want to meet the stamp duty holiday deadline.”

Strutt & Parker’s senior associate director in Exeter Oliver Custance Baker adds: “This is definitely something that we’ve seen particularly as current stock levels aren’t quite meeting levels of buyer demand. 

“In the Tiverton area we have numerous buyers who are sitting in rented accommodation, not only so they can try out the area and the lifestyle on offer, but to make sure that they’re first in the door when something that ticks their required boxes comes onto the market.”

Original Article from Mortgage Strategy 26/03/2021

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Stamp duty rush closing the asking to sold price gap

stamp duty gap

The heightened level of market activity due to the stamp duty holiday has closed the gap between asking prices and the amount buyers actually pay, according to research from GetAgent.

Prior to the stamp duty holiday, asking prices between January 2020 and June 2020 averaged £277,104, while buyers paid £248,102 on average, a -10.5% difference.

However, the heightened market activity seen as a result of the stamp duty holiday has caused this gap to close to -7.2% since 8th July last year.

Sold prices have averaged £261,325 since the introduction of the holiday, up a notable 5.3% when compared to the previous average of £248,102.

GetAgent says this gap could have closed even further, but savvy sellers have looked to make the most of buoyant buyer activity with a marginal increase in asking prices of 1.6% since the introduction of the holiday.

Prior to the stamp duty holiday, sold prices in London came in -0.5% lower than the average asking price. However, since its introduction, the capital’s homebuyers are selling at an average of £493,075, 2.1% more than the average asking price of £483,047.

The North East has also seen sellers benefit the most. Prior to the launch of the holiday, the average asking price was £133,871, while sold prices came in -5.2% less at an average of £126,977. Since the holiday launched, homes are selling for an average of £135,831, 0.3% more than the average asking price of £135,363.

The South East (-3.2%), East of England (-6.2%) and West Midlands (-7.6%) are home to the lowest gaps between higher average asking prices and the average sold price paid by buyers.

Founder and CEO of GetAgent, Colby Short, commented: “It’s inevitable that sellers will enter the market at a higher price than they’re likely to sell for and so sold prices are almost always going to come in at a lower average than asking prices.

“However, in hot market conditions, this gap tends to close as more buyers fight it out for the same property and at present, we’re seeing a pretty hot market indeed. So much so that sold prices in both London and the North East have actually crept above the average asking price since the introduction of the stamp duty holiday, while all but one other region has seen the gap close.

“With more money in their pockets and more competition when trying to secure a home, buyers are paying that little bit more. Of course, this gap would be wider, but savvy sellers are also entering the market at a higher price point in order to make the most of these buoyant market conditions.”

Original Article from Financial Reporter 25/03/2021