Though the effects of the pandemic did not leave a single sector unaffected, the Real Estate market, through its struggles, seemed to pull through better than other portfolios.
To recover from these effects, however, will take time and planning. Nevertheless, this period of uncertainty has made estate agents in all areas, urban and rural, including the Aylesbury letting agents, aware of what may and could happen in the property market.
SDLT holiday extension: The holiday has been extended until the end of June 2021, with a phase-out period until September 2021. This has been a boon for the property market, even though some buyers have difficulty with finance.
However, the benefit to avail of no stamp duty land tax for the first GBP 500,000 on the property till the end of June, with no such tax on the initial GBP 250,000 till the end of September 2021, is too good an opportunity to miss. Estate Agents will take advantage of this incentive to bring more buyers to real estate.
95% LTV Mortgage: With effect from April 2021, the government has brought in the 5% deposit mortgage scheme, which is advantageous to lenders and buyers who cannot put down a larger deposit. The government guarantees partial repayment to lenders if an owner defaults on payments.
And the lender can take a mortgage up to 95% of the property value. This scheme is available to first-time buyers and home movers. Buy to let properties and second homes are not eligible.
The repayment will be on the mortgage and not interest only, and certain affordability scores will need to be reached. Agents can help new buyers invest under this offer.
Distressed properties: Due to many reasons, some owners are forced to sell property in a hurry. These distressed properties are usually sold below market value. Sometimes they need to be renovated, but some are in good condition when sold.
For the professional buyer, such properties make good buy to let investments. Even if a few renovations need to be made, the value of such properties will increase. Estate agents can assist in locating such distressed properties.
Tax benefits: In the new Budget, CGT – Capital Gains Tax has not been increased. It is levied on the profit made from a sale (difference between sale and purchase values). It applies to properties sold that are not primary residences.
Allowable expenses can also be deducted. Estate agents can provide this benefit to professional investors in view of the change in mortgage tax relief or suggest alternate methods to reduce tax payable through limited companies where Corporate Tax (lower than CGT) is payable.
There are pros and cons to this, and a professional real estate agent will be able to clarify these.
Return to near normalcy: With the Covid vaccine programme running and the lockdowns over, everyone is hoping for a return to “what used to be”. Although working from home will continue, many offices, businesses and entertainment centres, including restaurants, gyms, sports, will reopen.
Although these will probably not be on the same huge standard as they were, there is still an opening for rentals for smaller offices and recreation hubs, not only in city areas but in suburbs as well.
In view of the uncertain future, short lets or medium lets will likely be more popular. Larger retail spaces could be renovated to smaller, co-working spaces or for mixed-use schemes.
The lockdowns have made people more aware of their homes – where they were forced to spend so much time during those periods. This made them prioritize the comforts of having a more spacious home-cum-office, with outdoor space for a garden and relaxation. This obviously led to larger accommodation with moves to suburban and country areas.
While a return to offices is likely to a certain extent, this trend of larger, comfortable homes will continue. As a result, agents will be able to draw more buyers to this type of accommodation.
Digital technology: The lockdowns made virtual viewing of properties possible, allowing prospective buyers to “see” details of the homes they were planning to buy. Estate Agents are able to offer property to foreign investors as well, using this technology.
However, virtual viewing is not the only aspect of technology that those involved in the property market are using. PropTech or property technology has become an important aspect.
Prospective investors can use this technology for more information and transparency. This can be a challenge for estate agents, and leveraging is required to provide what clients require – well being, sustainability and productivity.
Conclusion: Despite the general uncertainty of the future, the property market, which has always been resilient, will remain stable. The demand far exceeding the supply also makes it easier for agents.
By taking advantage of the opportunities and making changes to meet the challenges, Real Estate Agents can recover from the pandemic and continue to flourish.
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