Categories
Our thoughts //

What will happen to stamp duty?

As the Government’s Budget on the 3rd March nears, it’s looking unlikely the stamp duty holiday will be extended for a significant period of time, but after a year of uncertainty for the UK, it’s difficult to predict what will happen in the next few months. Government had said they would not be extending the holiday, but are now considering an extension of 3 months until June, to allow those currently purchasing to complete on their sale. However, if they change their mind it wouldn’t be the first U-turn we’ve seen in recent months…

The implications of not extending the stamp duty holiday are concerning for a lot of people, not least those currently caught in the bottleneck of house sales who would be unlikely to complete before the end of March deadline, with an estimated 70,000 sales agreed in 2020 not expected to make it through before this date. If the holiday did end and these purchases hadn’t gone through in time, there may well be some sales falling through. It also seems a number of people are holding out on sales and purchases through the uncertainty, waiting to see what happens, and they will likely have an impact on the housing market later this year as they decide whether or not to move forward with their purchases.

House prices look to be starting to fall in some areas and, if predictions come true, when stamp duty ends they’ll likely fall more rapidly. This reduction in price is to be expected as the market stabilises following several months of artificial stimulus from the stamp duty holiday causing record highs in property prices across the country. We’ve said previously, however, that the boom in 2020 looks to have been heavily driven by second and multiple home owners and the higher end of the market, where property continues to be seen as a good long-term investment project and whose jobs are less likely to have been hit by lockdown restrictions and redundancies. 

The accessibility of mortgage products has caused some issues for buyers in the past year but, whilst lenders are likely to remain cautious, we would anticipate some loosening of lending criteria as the implications of furlough ending and the vaccine roll out become more apparent and some certainty returns to the housing market with the risk to lenders becoming increasingly more stable and transparent.

The potential of negative interest rates in the coming months may also stimulate the housing market, with traditional savings accounts of little value, banks are encouraging lending through mortgage products, and those with surplus capital seeing property as a solid investment.

Demand continues to outstrip supply due to a long term skills and material shortage in the construction industry, compounded further by Brexit and fluctuations in demand created by changing living patterns during the pandemic, so whilst we face more uncertainty ahead, investors, buyers and those working in the property industry can take some comfort in the historic performance of the housing market and there are indeed scenarios to feel cautiously optimistic about.

Stamp duty explained

Stamp duty rates with the holiday until 31st March 2021

Add 3% if this is not your sole property.

Up to £500,0000%
The next £425,000 (the portion from £500,001 to £925,000)5%
The next £575,000 (the portion from £925,001 to £1.5 million)10%
The remaining amount (the portion above £1.5 million)12%

Stamp duty rates from 1st April (potentially 1st July) 2021

Add 3% if this is not your sole property

If you’re a first time buyer, you pay no stamp duty up to £300,000.

Up to £125,0000%
The next £125,000 (the portion from £125,001 to £250,000)2%
The next £675,000 (the portion from £250,001 to £925,000)5%
The next £575,000 (the portion from £925,001 to £1.5 million)10%
The remaining amount (the portion above £1.5 million)12%

So, for example…

If you buy a house for £625,000 in March 2021 you will pay £6,250 in stamp duty, calculated as follows:

0% on the first £500,000 = £0

5% on the remaining £125,000 = £6,250

If you buy a house for £625,000 in April (potentially July) 2021 you will pay £21,250 in stamp duty, calculated as follows:

0% on the first £125,000 = £0

2% on the next £125,000 = £2,500

5% on the remaining £375,000 = £18,750

Categories
Our thoughts //

Predictions for 2021

What will happen to property in 2021 //

You’ve likely heard it a lot recently but the world of property is changing significantly at the moment. This is the case for both the residential and commercial markets so we’re going to highlight a few changes, and throw our hat into the ring when it comes to opinions.

What will happen to the UK housing market //

House prices ended 2020 at a record high, but this is predicted to slow with prices expected to drop when the stamp duty holiday ends at the end of March.

The residential market is still busy as buyers continue to look for new homes, however, Zoopla is predicting that half of January’s sales won’t complete in time for stamp duty relief, and some commentators have raised concerns that this could result in buyers pulling out of sales as the tax returning adds 2-15% on to the property price*.

The Royal Institution of Chartered Surveyors (RICS) found most members expect weaker sales in the year ahead, with some citing rising unemployment and the looming return of higher stamp duty and land tax levels across the UK. However, Zoopla also suggested a shortage of stock after 2020’s sales boom could limit price declines, saying:

“the scale of any downside for prices and turnover in 2021 is lower than in previous downturns”

The boom in 2020 looks to have been heavily driven by second and multiple home owners and the higher end of the market, where property remains seen as a good long-term investment project and whose jobs have been less hit by lockdown restrictions and redundancies. This suggests that the market may not have as a heavy a fall as some predict, although will still likely be impacted by the return of stamp duty.

Another area that may help the housing market to continue on a positive trajectory is changes in working habits causing an increased demand, something Zoopla believes still “has further to run” as changes to working patterns continue through 2021 and beyond. There has been a big increase in searches for property with greater access to outdoor space as people move away from city centre working, with many people requiring greater flexibility with the space they have as they continue with home based working. The impact of the pandemic on working practices is very likely to be felt for years to come, and thus we will continue to require more from our homes as they increasingly become a hybrid of work and leisure time.

When we talk of the future, it would be difficult to shy away from the climate emergency and the environmental choices we need to make. We have written more extensively on environmental building practices here, but this is likely to be an area to watch as we look to reduce our impact on the environment through more energy efficient homes and construction.

*This is dependent on value of property and whether it is one residential property or a second, or multiple, home.

What will happen to UK commercial property //

The future of commercial property is incredibly interesting, to us at least. There is undoubtedly going to be change in the way businesses operate moving forward as they look to adapt post pandemic, although some of this change was arguably already in the making and just exacerbated by the pandemic.

Retail, for example, has been heavily impacted for years by the growth of online sales, but with us all forced to stay home multiple times over the past year, the world of online shopping became even more lucrative. What will happen to these buildings? Where anchor tenants like Topshop and Debenhams once stood, who will take over? We think it’s important here to consider what is lacking in a certain town or city and how these spaces can be repurposed. Sheffield, for example, has long had a lack of both housing and Grade A office space, whilst other areas may well see growth of bars and restaurants as people long to get back to socialising.

Offices will of course change, we’re all working from home where we can and for many people this has been beneficial in giving them more time as they avoid a potentially lengthy commute. Moving forward, there will very likely still be a use for offices as we look at a more hybrid working pattern with a mix of home and office use. Although demand for office space may drop, prior to the recession demand outweighed supply so this could bring about a more level field. Changes in working patterns are also forcing current owners, landlords and businesses to look at the quality of the office they’re providing. Several buildings in Manchester, for example, are being retrofitted with showers, bike storage and recreational areas, offers now seen as essential by many employees. Offices in towns and cities will likely be in demand again as we leave the pandemic behind, even though home working will continue to be popular, a flexible solution of home and office working will likely be the new normal.

We also think they’ll be a greater move towards experiences, with businesses offering consumers more than just one activity such as shopping. Manchester’s Arndale Centre, for example, had already started to repurpose units, creating a prosecco bar to drink while you shop, whilst Junkyard Golf in Manchester saw huge success with an activity and a night out rolled into one. Some spaces, particularly shopping centres, will likely be entering an extensive period of redevelopment as they look to bring consumers back into their units, finding news way to entice them.

So what will be the focus of property post-coronavirus //

We believe the future of property lies in residential, offices and experience driven services, so we’ll see town centres with greater hospitality, more city centre living and thus urban green spaces, and offices that offer something new to their staff. There’ll be a lot of repurposing of existing spaces, and we think quite a few commercial to residential developments as centres change and become more attractive places to live again.

When looking at what has happened after other recessions, it’s difficult to compare. The 2008 crash was a different experience to nwo because it was created from banks having no money, and the exacerbation of the housing crisis caused everything to stop. This situation is different. The recession we do see may well be reflected in isolated industries as opposed to the whole economy going down. Banks do have money and there will likely be a short sharp recession and a huge bounce back. Demand for businesses that closed, such as pubs, restaurants and hairdressers, will return because the loss of demand was due to the manufactured situation of lockdown, and the consumer demand is actually still there.

The pandemic will be a catalyst for change for how businesses do things, with many likely coming back with a different model. There are also opportunities for other sectors to grow. The property industry for example, will be implementing change, doing due diligence, advising on changes of use, and creating and building new spaces.

Change is scary for some, but as the vast industrial heartlands of the north have been forced to find rejuvenation and a new purpose, so will many of our current retail spaces. Change isn’t always a bad thing. If it weren’t for deindustrialisation, I’d probably be covered head to toe in soot down a mine or at the Furniss, instead of writing this blog comfortably at home in my shirt with a coffee. ‘Proper work’ my old Grandad would say, maybe he was right, a real tragedy I’ll never know, I’m sure. In short, looking to the future there is definitely a period of change, but repurposing what is there and creating new things can be a positive as we move forward and say goodbye to covid.

This information and data in this article was correct at the time of publishing. However, it may now be out of date or superseded. Fourth Wall make no representation or warranty of any kind regarding the content of this article and accept no responsibility or liability for any decisions made by the reader based on the information/ data shown here.

Categories
Beginners Guide

Which building survey is right for me?

Intro //

When buying a home, you should be advised by your estate agent and solicitor to get a building survey. We’re hoping you already have and that’s why you’re here! All our surveyors are members of the Royal Institute of Chartered Surveyors (RICS) so are qualified and experienced to conduct a thorough survey for you.

RICS has done research that found home buyers are often confused by the products on offer and many are not aware of what survey they’ve paid for and what it should include. They’re introducing a new home buyers survey standard to simplify the process and language used in surveys and standardise their format to ensure they are all clear, honest, upfront about costs, and provide definitive value to clients. We’re proud to already adhere to these standards with our Level 2 and Level 3 surveys.

Choosing which survey is right for you and your property can depend on many things, such as if you need detail on costs, the age of your property and its general condition. It’s essentially a health MOT for your house.

What is a Level 2 Homebuyers Survey //

Level 2 surveys, also known as a homebuyers survey, involve an inspection of easily accessible areas of the property and will highlight serious issues relating to the building fabric and services such as gas and electric. This level of survey highlights defects identified but will not provide a detailed analysis, explanation of potential remedial options, or predicted costs.

In our Level 2 surveys, we provide an overview of the condition of the property, what repairs are needed, and guidance on further issues your solicitor should investigate. If your house is a fairly new build, a Level 2 survey should be sufficient as there are unlikely to be significant or historic defects, but in older properties we always recommend a level 3.

What is a Level 3 Full Building Survey //

If you’re looking for something more in-depth with full cost guidance, if the property was built pre-war, or is in a general poor state of repair, we’d suggest getting a Level 3 survey, also known as a full building survey. This survey is much more thorough, will access all areas of the property if possible, and will identify significant repairs and defects outside of routine maintenance. A Level 3 survey will give full details of what the issue is, why it’s an issue, why it’s occurring, what will happen in future if it’s not dealt with, timescales for work to be done, and costs of the work to repair, so you will have full peace of mind of the condition of the property you’re buying.

We think our full building surveys are free, because we’ll provide you with a comprehensive survey from a RICS chartered building surveyor, with clear advice on the property’s condition and costs associated with any defects, so you can negotiate with your vendor on the price of the property, or even help you decide whether to go ahead with the purchase. Have a look at an example of our Level 3 full building survey here.

Why use Fourth Wall //

We guide you through the process, not just provide you with a one-off report. Our small team of knowledgeable surveyors are always at the other end of the phone so you can discuss the findings directly with your surveyor.

Our bespoke reports provide risk ratings and a traffic light system so you can immediately understand what you need to worry about. We remove the jargon and talk to you in a language that everyone understands, and provide photos throughout your report so you can easily reference any issues without any hassle.

Check out our full list of services here or get in touch for a chat.