Marketing No Comments

End of Lockdown Signals New Start For UK Property

In February, UK Prime Minister Boris Johnson announced the government’s four-stage roadmap out of COVID-19 restrictions. Housing experts are predicting that this also signalled the start of a new era for UK property.

Summary:

  • April 2021 has seen UK life start to get back to ‘normality’, with outdoor dining, non-essential shops, pubs and the beauty industry reopening, and even staycations allowed again.
  • Initial figures from across the housing industry indicate that UK property is reacting strongly to the ease of restrictions, with a ‘post COVID-19’ boom on the horizon.
  • Housing experts and professionals are predicting that the COVID-19 pandemic has changed the way we live, and how we see our homes, forever.

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

Confidence in the market

Since COVID-19 became part of the lives of millions of people across the world, the UK government has always made it clear how important the country’s housing market is to the wider economy.

The housing market was re-opened earlier than many others around the globe and the government initiated extra support such as the Stamp Duty Land Tax (SDLT) that was introduced in July 2020 and extended in March 2021.

Looking at the recent data, this support appears to have made a huge difference to the UK housing market, confidence amongst professionals is high with the continued growth:

  • The latest house price index from Halifax shows that property prices increased by 1.1% between February and March 2021 and they are also now 6.5% higher than in March 2020.
  • Recent data from the Office of National Statistics demonstrates that the UK economy returned to growth in February, with output rising by 0.4%. Construction was the highest growth area (rising by 1.6%), providing further support to the UK housing market.
  • The latest economy and property market update from the Royal Institute of Chartered Surveyors (RICS) suggests that property activity is set to increase as lockdown restrictions are lifted. Specifically, their data is showing that tenant demand is remaining firm, with rents projected to rise by around 2.5% nationally over a 12-month time period.
  • Homebuyers and Investors are flocking to property portals, with Rightmove showing record days of activity in March and April. On Wednesday, 7th April more than 9.3 million people visited the property portal.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

Employment figures are also thought to be a key indicator of the future strength of property market. Unemployment figures fell in March 2021 and the hope is that as businesses re-open, these figures will fall even further.

Low interest rates are also allowing mortgage borrowing to continue and the fears of an immediate economic shock caused by Brexit appear to be unfounded.

Confidence in the UK in general appears to have been bolstered by the government’s successful roll-out of the vaccination programme and people are optimistic that the country is hopefully on an ‘irreversible path’ out of lockdown. This allows people to more assuredly turn their attentions to matters such as buying houses and making investments.

Overseas investment

Overseas sentiment in the UK market seems to be following the trend of domestic confidence. According to data from estate agent ludlowthompson, the number of as landlords owning property in the UK has reached a five-year high. The number is currently at 184,000 which represents a 19% rise over the past five years.

While there are forthcoming implications from impending tax changes in the buy-to-let sector for overseas buyers, what the COVID-19 pandemic and Brexit show us is that the UK property market is robust enough to attract overseas investment even in the face of adversity.

Future of UK housing market

Many housing experts are forecasting that the market will be changed forever due to the effects of the COVID-19 pandemic. Working-from-home is no longer a perk given by a few choice employers but is being seen as a ‘normal’ way of working that will continue to be a big feature of our lives.

This is having a big effect on how people see their homes and how they need them to function. Many are now desiring bigger living spaces so that they can have a dedicated ‘working-from-home’ area, and the need for outside space in the form of a garden or balcony is also likely to have major implications on the UK residential scene.

While there are many external factors that can be influential on the UK housing market, the reality is that it is a sector that will always bounce-back after a dip. With current house prices growing, demand remaining strong, and the UK government seemingly determined to ensure its strength, the future of the UK housing market is looking bright indeed.

Source: Select Property

Discover our Mortgage Broker services.

UK housing market Property market Residential Mortgage house hunters Covid-19 residential transactions
Marketing No Comments

Covid-19 has changed what buyers and renters find essential

More than a quarter of the UK’s renters and homeowners (26%) have found their property needs have changed since the outbreak of Covid-19, according to new research from Gradual Homeownership provider, Wayhome.

After more than a year of remote working and months of non-essential shops and eateries being closed to the public, previously “high-valued” property amenities have slid far down the priority list. Indeed, among the renters and homeowners whose property requirements changed amid the pandemic, the least important features are now having an easy commute to work (17%), being close to shops and restaurants (17%) and living near public transport (14%).

Wayhome’s research indicates a new set of property amenities will take precedence once lockdown lifts, given the prolonged time spent at home and likelihood of hybrid working for office-workers going forward.

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

Indeed, when asked which property features had become more important since March 2020, more than a quarter (26%) said having the space for a proper home office was increasingly critical. And, given the fact so many working parents have had to juggle work and childcare commitments, the need for decent office space rose to 30% for parents, compared to 22% of non-parents.

As well as specific space for a home office, lockdown has caused a general desire for more space, be it for work or leisure. Almost a third (30%) of all homeowners and renters wanted more space in general, and a quarter (24%) said having a bigger bedroom was necessary.

And as more of us have spent time indoors, having access to a private garden has become increasingly important. 36% said this had become more important over the past year – a more popular desire among older people, especially 55-73 year olds at 52%, falling to 43% of 43-54 year olds and 35% of 24-42 year olds.

Similarly, a fifth (21%) of all respondents felt living near a public garden or green space was important to them, and the same number prioritised being near friends and family – a feature that resonated higher among women (25%) than it did for men (17%).

Discover our Residential Mortgage Broker services.

Features which have become more important post-CovidFeatures which have become less important post-Covid
Garden (36%)Having an easy commute to your workplace (17%)
More space (square footage) (30%)Being close to local shops/pubs/bars and restaurants (17%)
A home office (26%)Being near public transport (14%)
Bigger bedrooms (24%)Balcony (13%)
Being near my friends/ family/ support network (21%)A home office (13%)
Being near public garden/ green space/ woodlands (21%)Off-street parking (13%)
Having an easy commute to your workplace (17%)Playroom for children (12%)
Being close to local shops/pubs/bars and restaurants (17%)Bigger bedrooms (12%)
Playroom for children (15%)Being near my friends/ family/ support network (12%)
Off-street parking (15%)More space (square footage) (12%)

This research looking at the impact of the pandemic on people’s changing property needs comes ahead of the launch of a report by Wayhome on the challenges facing the UK’s renters and homeowners.

Nigel Purves, CEO of Wayhome commented: “When you’re narrowing down your search for the perfect home to rent or buy, most of us will have a wish-list, usually split into the “essentials” and “nice-to-haves”. Our upcoming report makes it clear just how far these wish-lists have changed as the pandemic rolled on. In most cases, we’ve seen a complete reversal, with potential renters and homeowners prioritising the things that would make living and working in that space the most comfortable and fit for purpose.

“While having the flexibility to pick and choose a desired property based on its amenities and special features doesn’t seem too much to ask – for a lot of people it’s near impossible. Far too often renters are being driven into buying smaller first-homes or properties in locations that aren’t suitable. Despite earning a good income, affording a deposit big enough to secure a suitable home and hitting the affordability criteria set by mortgage lenders is unsurmountable – as evidenced by the fact full-time workers would need to spend at least 7.8 times their annual earnings to be able to afford a home in England*.

“With the end of lockdown in sight, now would be an opportune time for the industry to reassess the actual needs of renters and homeowners post-pandemic and support innovative and alternative routes that get more people onto the property ladder.”

BY MARCO CALLEGARI

Source: Property Wire

Discover our Mortgage Broker services.

rental supply london
Marketing No Comments

Tenant rent arrears decline but industry urged to remain cautious

The percentage of tenants in rent arrears decreased during October and November, according to research from PayProp.

Payment data from the rental payment platform also shows that the typical percentage of rent in arrears fell consistently from August to November.

However, with strict COVID-19 restrictions across large parts of the country set to remain in place for the foreseeable future, PayProp said letting agents and landlords should prepare themselves for arrears increasing again in the first few months of 2021.

PayProp’s platform data offers financial evidence that the percentage of tenants in arrears dropped to 11.8% in November, down from 12.2% in October.

This is the lowest percentage recorded since before the spring lockdown in March when 9.6% of tenants were in arrears.

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

The number of tenants in arrears spiked during September, to 15.1%, although this remains below the 2020 peak of 15.5% recorded in May. A rise in September could be due to increased redundancies as official figures showed that 11.3 people per 1,000 employees were made redundant as the pandemic continued to hit businesses.

Neil Cobbold, chief sales officer at PayProp, said: “The general downward trend of tenants in arrears over the autumn and winter months of 2020 is positive news for letting agencies and landlords.

“Falling arrears suggest that even though restrictions were tightened once more towards the end of the year, society has adapted to the ‘new normal’.”

The research shows that the percentage of rent owed by tenants in arrears fell to 121.1% in November, down from 124.4% in October and 125.5% in September.

The level of rent owed by tenants in arrears in November was equivalent to the level recorded in May but didn’t quite reach the peak of 127% recorded in August.

Meanwhile, 77% of tenants paid off some or all of their arrears between September and October, while a further 50% paid back arrears between October and November.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

Between August and November, the percentage of tenants reducing their arrears averaged between 44% and 48%, while the percentage increasing the amount they owed also remained high at an average of 45% to 49%.

Cobbold added: “Our research shows that on the whole, tenants who end up in arrears try to clear them. Even if they cannot afford to pay back the full amount, renters are generally open to reducing what they owe through affordable repayment plans.

“A particularly high level of tenants reducing their arrears during September could have been linked to a resumption of evictions in England and Wales, with renters agreeing to pay back what they owe in order to avoid their landlord seeking repossession.”

Despite the reduction in arrears recorded between September and November, the situation could worsen again in the early part of 2021.

PayProp said nthis is partly due to a seasonal bump in arrears as people spend more over the festive period. Meanwhile, with millions of people under the strictest tier 4 restrictions, more jobs could be at risk.

Cobbold said: “Although the situation improved towards the end of 2020, current market conditions mean that letting agents and landlords should be cautious at the start of 2021 as things could get slightly worse before they get better.

“Agents must ensure they have the systems in place to deal with arrears, while facilitating effective communication between landlords and tenants.”

Although arrears could rise again in the coming months, 70% of tenants surveyed by PayProp said COVID-19 and subsequent lockdowns have not made it more difficult for them to pay rent.

“Restrictions put pressure on sectors such as hospitality, but they also give tenants the opportunity to save money which would otherwise have been spent on socialising.

“With the extension of the furlough scheme until the end of April, as well as the ongoing national rollout of a COVID-19 vaccine, there is optimism that tenant finances will be in a stronger position by the middle of 2021,” Cobbold concluded.

Source: Mortgage Introducer

Discover our Mortgage Broker services.

Expat Remortgage Case Study Covid-19 Property viewings Mortgage adverse credit Advance bookings for viewings BTL Landlords
Marketing No Comments

Covid-19 set to change what consumers want from property

The idea that ‘customer is king’ affects all industries, and has grown exponentially in importance for businesses and investors in recent years. The Covid-19 pandemic is having specific and significant impacts on the private rental sector through customer wants and needs.

Some of these are existing trends and changes, exaggerated by circumstance. Others are new. All must be considered by PRS investors. Two key areas of consumer need are relevant:

• What customers want, and are willing to pay for; and

• Consumer confidence.

The PRS market context

Before sharing my thoughts on how customer wants, needs and confidence are changing what works in the PRS in a post-Covid world, it is important to set the context.

National and international investors are attracted to the sector, as UK residential property investment has for many years offered compelling stability, growth, yield and a hedge against inflation.

The UK PRS is unique, partly due to our cultural obsession with home ownership that has come to dominate the wider housing market.

Key points

  • Tenant needs are changing post-Covid
  • People care more about having a garden and space to work in
  • Economic confidence will be a driver of change

The sector has doubled in size in the 20 years from 2001, from 10.2 per cent to 20.3 per cent of households, according to Savills.

Since 1997, and the widespread take-up of Buy-to-Let mortgages, the make up of investors has diversified dramatically.

Savills also found that 94 per cent of the PRS was owned by individuals in 2018, with the vast majority of landlords owning four or fewer properties, and only 1 per cent owning more than 10 different properties in 2010.

The diversity of ownership has fallen since the Montague Review 2012 and a raft of regulatory changes such as mortgage interest relief via section 24.

The make-up of investors in the PRS is important because:

• It profoundly affects what the PRS actually looks like, and how it responds to Covid-19.

• In many ways, investors are considered as consumers too: you only need to watch Homes Under the Hammer, or read any major news publication, to realise how many ordinary people feel they can and should get involved with UK residential property investment.

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

My own experience since studying land economy has predominantly been with PRS assets worth less than £5m, which make up more than 90 per cent of the £1.5tn sector.

I typically work with high-net-worth investors who want the benefits of PRS investment, without the hassle. During lockdown, I published a book on what works and what does not in this complex market.

The main message was that what works must be increasingly professional and efficient, while allowing the investor to be hands off.

Consumer appetite

So, how will Covid-19 affect customer appetites in PRS investment and the wider property market?

What consumers (tenants) want and are willing to pay for relates to buildings, service and confidence. Surveys suggest that people are thinking differently about their housing choices.

Perhaps unsurprisingly, people care more about having a garden, more indoor space, the right neighbours and local community, and space to work from home. It seems clear that ‘walk to work’ locations and layouts that facilitate working from home will be increasingly important.

On fabric of buildings, everything hinges on ability to pay. This may change in the aftermath of chancellor Rishi Sunak’s generous furlough scheme.

The truth is that there is a wider trend: what institutional investors often fail to consider, and many smaller landlords know well, is that many ordinary people, and in particular young people, are not willing to pay for what they say they want when you ask them.

This will need to be considered by PRS investors in a post-Covid world. What is more, appetite changes fast. The idea that ‘yesterday’s news is today’s fish and chip wrapper’ seems rather old hat to anyone who understands TikTok.

The PRS is not just about buildings, but also about service. On this, Helen Gordon, chief executive of Grainger, got it right when she described a core focus on innovation, communication and improvement. Kindness, compassion and a flexible, responsive service driven by technology is key. To an extent, the former of these have been necessitated by the ‘moratorium on evictions’ through Covid-19.

Economic confidence will also prove a key driver of change. There are widespread reports of PRS tenants handing back keys and moving back in with their families. Key life decisions are being delayed, whether due to cancelled weddings or employment status nerves.

The desire for more and better inside and outside space, combined with economic necessities and Covid-inspired nerves have resulted, in many parts of the country, in a correction in the ‘shrinking households’ phenomenon that has accompanied later settling down, and fewer/later lasting marriages, in favour of higher voids. This may not prove permanent, but it will certainly be relevant in the short to medium term.

Investors as consumers, and what they want

While tenant needs are key, there is another relevant group of ‘consumers’, who are acting as investors in the PRS. Side-line landlords have been on the decline due to market and regulatory changes, but what these investors want remains a key driver in the PRS.

What investors want in a post-Covid world is confidence, above all else. This is the currency of the era, and it seems to be worth more than data and oil combined.

They want yield and an inflation hedge. Mass government stimuli and long-term low interest rates are creating an unprecedented appetite for yield. Individual investors in a post-Covid world want this without the increased hassle (for example, more effort around health and safety, and increased need for tenant communications such as that around payment of rent and job security) associated with investing directly.

More professional delivery of PRS-focused investments targeted at ordinary investors seems essential to meet this growing demand.

The truth is, real estate is not about inanimate objects. Much like the internet, powerful businesses and governments effectively control access, and its content both shapes and reflects the pulse of the nation.

In a post-Covid world, we will of course need increased focus on public health in PRS products and services. Investors and operators must consider what tenants want, need and are willing to pay for, and do our best to deliver excellent customer service to tenants.

In many ways, I believe there has never been a better time for investors to access the PRS.

What needs to change is the way so many investors access this sector: it must be professional, efficient, and underpinned by superior technology, systems and customer service if it is to work for tenants and investors alike, in a post-Covid world.

By Anna Clare Harper

Source: FT Adviser

UK house prices Property prices housing market
Marketing No Comments

UK housing market at decade high after COVID-19 bounce back

The UK housing market had its busiest month for a decade in July as the value of property sales reached a record £37 billion, according to Rightmove.

Agreed property sales increased by 48 per cent compared with the same month in 2019 and were 20 per cent higher than the previous record noted by Rightmove’s monthly survey in March 2017. The momentum in the market has continued this month, with the latest weekly figure revealing a 60 per cent hike in sales.

Rightmove said that the £37bn of agreed sales that it had recorded was the highest since it started tracking the data a decade ago. Its report is the latest evidence of bounce back in the UK housing market since the coronavirus lockdown measures were eased and Rishi Sunak reduced stamp duty by raising the threshold at which buyers start to pay the tax to £500,000.

Pent up demand for property is driving the soar in housing market activity, the stamp duty cut and people rethinking where they want to live because of the nature of life under lockdown and the possibility of working from home more regularly.

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

However, while Rightmove and other reports have suggested that the market is enjoying a rebound, economists fear that it could come to a swift end by a rise in unemployment and further economic slowdown when government support schemes come to an end.

Furthermore, the housing market could be hit with a wave of home repossessions once banks end the mortgage holidays that they have offered during the pandemic, The Times reports.

The stamp duty holiday is also due to end at the end of March 2021. Banks across the UK are also anticipating a decline in house prices with their recent financial results revealing various plans put in place to account for losses stemming from this. Metro Bank said it expected prices to drop by 14.6 per cent.

Rightmove said that the average asking price on a property in the UK was now £319,497, slightly lower than the record high of £320,265 in its July report.

The mass city exodus has helped to push prices to record levels in Devon and Cornwall, but prices in London have fallen by 2 per cent month-on-month, with some landlords opting to put their city flats on the market in the wake of a slump in the number of tourists and students.

Nevertheless, the 0.2 per cent monthly drop in prices is lower than the average of 1.2 per cent usually recorded at this time of year as activity slows in the market.

Miles Shipside, Rightmove director and housing market analyst, said: “There have been many changes as a result of the unprecedented pandemic and these include a rewriting of the previously predictable seasonal rulebook for housing market activity and prices. Home movers are both marketing and buying more property than we have recorded in any previous month for over ten years, helping to push prices to their highest ever level in seven regions.”

Source: Scottish Legal

Mortgage brokers stamp duty Welsh housing market UK properties Yorkshire property sector buy-to-let mortgages October property
Marketing No Comments

Mortgage brokers urged to diversify in wake of Covid

Mortgage brokers have been urged to branch out into specialist lending as a way to diversify against falls in mortgage activity.

Encouraging brokers to “embrace” specialist lending, Rob Barnard, director of intermediaries at Masthaven, a specialist lender, said: “I think brokers now won’t just rely on mortgage business; they won’t just rely on product transfer business. Because they’ve had a period here right at the heart of the lockdown where there wasn’t a great deal of mortgage business about”.

Statistics from the Bank of England show approvals for purchase mortgages reached 40,000 in June, up from the record low of 9,300 in May, but still below a pre-Covid level in February of 73,700.

Mr Barnard added: “One area that we found that was rebounding quicker than any was bridging. And we found that brokers wanted to find out more about the bridging sector.”

He continued: “Make sure that you’re not just dependent on mortgage business, so if this ever happened again, you’ve got more strings to your bow”.

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

Anthony Rose, director at LDNfinance, said his firm had seen a “large increase” in clients who required a bridge, or thought it might be their “only option”.

Jamie Lewis, managing director at Affinity Mortgages, which also offers advice on bridging loans, said his firm launched a specialist lending arm in 2018 after packagers and master brokers did not meet their expectations.

Mr Lewis said: “We noticed that we as a broker were being asked for more than mortgage broking and were merrily delivering these clients to a third party business that maybe had a different working ethic to ours where the client will always come first”.

Additionally, Masthaven’s Mr Barnard predicted a change in demand for specialist lenders. He said: “Lots of people’s financial circumstances have been radically affected by the crisis. Small business owners, the self-employed, people who’ve been furloughed or who have had to take a mortgage payment holiday may all now be prospective customers for specialist lenders”.

Carl Shave, director at Just Mortgage Brokers, agreed that in the current financial and economic climate, cases previously regarded as “vanilla” were no longer necessarily as straightforward.

Likewise, LDNfinance’s Mr Rose said that the financial implications of the coronavirus for certain clients had “highlighted the need to be able to look at the full range of options, ranging from the most vanilla high street solutions all the way to the most complex bridging or private bank mortgage”.

Clayton Shipton, managing director at CLS Money, also agreed with Mr Barnard, and warned that some clients may not look elsewhere if they were unable to find a mortgage through an adviser with limited specialist knowledge.

Mr Shipton added: “It shouldn’t come down to a lottery of picking the right broker – every broker should be educated in prime and specialist lenders”.

By Chloe Cheung

Source: FT Adviser

UK house prices Residential transaction House purchase lending Bank of Scotland mortgage lending growth mortgage payment holidays lenders
Marketing No Comments

Lenders pledge ongoing support for those affected by Covid

Mortgage lenders are committed to supporting borrowers who are reaching the end of a three-month payment holiday to choose the next steps that best suit their needs, according to UK Finance.

This comes after HM Treasury confirmed last week (May 22) that mortgage customers, who were struggling to pay due to the coronavirus, can extend their payment holiday for an additional three months or begin to make reduced payments.

Figures from UK Finance showed that an equivalent of one in six mortgages are currently covered by a payment holiday, with more than 1.82m payment holidays having been issued as of May 20.

The industry body said it was “important that customers receive the support that is right for them” and for those who had already taken a payment holiday, an extension “may be appropriate in some circumstances”.

It encouraged borrowers who are concerned about their ability to pay to contact their lender and consider the “full set of options available to them”.

These include reduced payments, a move to interest-only payments for a period, extending the term of the mortgage to reduce payments, taking a payment holiday if the customer has not already done so or a further extension of the payment holiday.

Stephen Jones, UK Finance CEO, said: “Mortgage lenders are committed to providing those borrowers nearing the end of their three-month payment holiday with help and flexibility in choosing the next steps which best suit their needs.

“The industry looks forward to regulatory guidance being finalised swiftly to ensure both borrowers and lenders can plan over the coming weeks.

“Meanwhile those borrowers who have already taken a mortgage payment holiday and can afford to make payments are encouraged to do so, as this will reduce the level of their repayments in the long run.”

In response, Vim Maru, retail director at Lloyds Banking Group, said: “We are already proactively contacting our customers who will be reaching the end of their repayment holidays to support them in restarting their payments.

“For those who may continue to be financially impacted, we will offer a range of support based on their current financial circumstances.”

But Dominik Lipnicki, director at Your Mortgage Decisions, said he would welcome a “more uniformed approach from lenders when it comes to the ease of application [of a payment holiday] and how these borrowers are looked at in the future when remortgaging or buying a new home”.

Research from YouGov for Nationwide found that 21 per cent of homeowners in April were worried about not being able to keep up with mortgage payments, and 14 per cent feared losing their home.

Lenders have also committed to continue suspending involuntary repossessions for residential and buy-to-let customers until October 31, as set out in the Financial Conduct Authority’s draft guidance for lenders published last week (May 22).

On the day the FCA published its draft guidance, Nationwide pledged that none of its mortgage customers, who fell into arrears as a result of Covid-19, would see their home repossessed until the end of May 2021, if they worked with the provider to “get their finances back on track”.

Joe Garner, chief executive at Nationwide, said: “As a mutual, founded to help people into a home of their own, this is what building societies have always been about. We hope this additional support will provide extra flexibility to those who most need it, to help get them back on track.”

Mr Lipnicki added: “The fact that repossessions are on hold is a very welcome relief for affected borrowers and I am sure that more flexibility will need to be applied even after October 31”.

By Chloe Cheung

Source: FT Adviser

new mortgage guarantee scheme Low deposit mortgage UK mortgage approvals borrowing mortgage payment holidays mortgage payments FCA UK Mortgages approvals
Marketing No Comments

Most brokers think lending will recover to pre-COVID-19 levels within 9 months

Three quarters (77%) of brokers reckon mortgage lending will recover to pre COVID-19 levels within 9 months, while half (51%) believe it will happen within 6 months, research from Smart Money People has found.

Appointed representatives are more optimistic than directly authorised brokers, with 59% of ARs predicting that lending levels will recover within six months, compared to just 37% of DAs.

Michael Fotis, managing director of Smart Money People, said “Tentative steps are being taken to get the economy moving, and many lenders are talking loudly about their appetite to lend.

“That said, with job security likely to be a concern for many consumers, and predictions that house prices may decline by up to 13%, it’s really hard to see customer appetite for new mortgage lending returning until 2021 at the earliest.”

Brokers focused on the equity release market proved to be particularly sceptical of a full recovery, as just 19% felt lending levels will bounce back within six months.

BY RYAN BEMBRIDGE

Source: Property Wire

London homes property market
Marketing No Comments

Is Covid-19 really impacting demand for property?

Alpa Bhakta, CEO of Butterfield Mortgages, looks at the prime central London property market where transactions made a strong start to the year but that has now changed. It’s difficult to predict the future but Alpa remains positive.

When Covid-19 lockdown measures were first introduced in March, businesses large and small were forced to change the way they operated, the services they provided and the manner in which they engaged with clients.

Now, over a month since these lockdown measures were first introduced, it seems as though organisations have, for the most part, adapted to this new climate.

For real estate, social distancing regulations have forced construction sites to temporarily close, compelled sellers to take their property off the market and brought the majority of existing transactions to a standstill.

House prices

Should the UK remain in a state of lockdown for the coming months, there are fears that the rate of house price growth could drop significantly. Cebr recently announced that house prices in the UK will fall by 13% by the end of 2020 as a consequence of Covid-19.

Of course, there is a natural propensity for forecasts to take into account worst case scenarios. We received similar projections in the lead-up to the 2016 EU referendum. One month before the vote took place, HMRC warned that house prices would drop by at least 10% should the UK vote for Brexit, and as much as 20% two years following the vote.

Evidently, this proved not to be the case, showing why we should be critical when assessing how certain future events will affect demand for real estate. This is also true when we consider how different sectors of the market are performing, like prime central London (PCL) property.

Strong start to 2020

The PCL market was in a strong position at the beginning of 2020. Knight Frank recorded more transactions in prime central London property in the two weeks following the election than it had witnessed since December 2016. As a result, it anticipated a significant rise in PCL transaction activity over the course of 2020.

Covid-19 has now brought many of these early projections into question. Transactional activity has slowed, but this is not due to a lack of demand.

In reality, prospective buyers are simply not in a position to act on their investment intentions due to the obstacles posed by the pandemic. In this sense, the rate of PCL house price growth is likely to slow, as should be expected given the current circumstances.

The question, and bigger fear, is whether Covid-19 will have a long-lasting impact on demand for real estate. Will investors be deterred from UK real estate or will they simply continue to act with the same enthusiasm displayed at the beginning of the year?

Optimistic future

There is good reason to be optimistic about the future. If Brexit has taught us anything, investors will only act confidently once certainty has returned to the market. Boris Johnson’s victory in the 2019 general election was this breakthrough moment previously, and I am confident a similar event will trigger a second surge of investment activity across the wider property market.

This view is shared by global real estate provider Savills. Having reviewed its five-year projections, it remains confident that average UK property prices will increase 15% by 2024 even with the uncertainty surrounding Covid-19. This is an impressive rate of growth, even if it reflects residential real estate instead of just PCL market.

The situation regarding Covid-19 is constantly changing and there is still no indication of when the current lockdown measures will be lifted.

At this moment, it is difficult to make any bold predictions about the future, but we should not let negative speculations overshadow the positive performance the PCL market displayed at the beginning of the year.

Once Covid-19 has been contained and lockdown measures rolled back, I anticipate an increase in property transactions taking place.

Source: Mortgage Finance Gazette

Marketing No Comments

UK businesses quick to adapt to threat of COVID-19 according to new research from Aetna International

50% of UK firms had issued a policy and over a third had offered remote working prior to working from home guidance from Government

With countries across the world now in lockdown due to the spread and risk of COVID-19, new research commissioned by Aetna International, conducted between 4 and 27 March and announced today, shows a majority of businesses in the UK had prepared and reacted to the growing threat pre-lockdown.

According to the research, by 11 March when the World Health Organisation (WHO) officially declared COVID-19 a pandemic, 83% of businesses had already taken some form of action to support employees. In the markets the research covered, this date was two to three weeks before local lockdown policies were put in place, and a third (31%) of businesses had already given employees the option to work remotely, and 44% had issued health tips to employees.

The research amongst office workers across four markets (UK, USA, UAE and Singapore) was part of Aetna International’s ongoing insights programme into issues affecting businesses, including the provision of mental and physical health support. According to the findings, larger businesses (those with 5,000 employees or more) were perhaps understandably quicker to respond to the global issue, with 44% issuing guidance on how they were dealing with the risk prior to the WHO announcement.

In the UK, prior to the government’s advice to work from home on 16 March, over a third (36%) of businesses had already offered this to employees, whilst over half (56%) had issued health tips to minimise risk and advice for self-quarantine.

A quarter of UK businesses had already banned all travel and 50% had issued a policy on how they were dealing with it, according to employees.

Richard di Benedetto, President at Aetna International, said: “The spread of COVID-19 across the globe has been rapid, and its impact on all our lives – both personally and professionally – has been significant. Despite the economic challenges facing many businesses, it is testament to the resolve of business leaders that they reacted so quickly to support their employees’ health and well-being.

“Whether through simple messages and tips, or bringing in remote working early, clearly they were doing what they could in unbelievably challenging times. As this complex situation continues to evolve, we will continue to assess how companies are adapting during this period of uncertainty, to ensure we are doing all we can to help them safeguard the mental and physical health and well-being of their employees.”

UK results breakdown from 4 March to 27 March:
In the UK, prior to the government advice to work from home on 16 March…

  • 81% had done something according to their employees
  • 58% had issued a message of concern to all workers
  • 50% had issued a policy on how they were dealing with it according to their employees
  • 56% had offered health tips for minimizing the risk and advice for self-quarantine
  • 36% had offered the opportunity to work remotely to all those concerned
  • 9% had provided access to private medical health checks to all employees
  • 25% had banned all travel
  • 23% had begun to implement reduced working times
  • 35% had suspended work-related events for large groups
  • 34% had asked those that have travelled to high risk areas to work remotely for 14 days

Research breakdown
Prior to the WHO officially declaring COVID-19 a pandemic:

  • 17% of firms across UK, UAE, US and Singapore had done nothing according to their employees
  • 42% of firms across UK, UAE, US and Singapore had issued a message of concern to all workers
  • 42% of firms across UK, UAE, US and Singapore had issued a policy on how they were dealing with it according to their employees
  • 44% of firms across UK, UAE, US and Singapore offered health tips for minimizing the risk and advice for self-quarantine
  • 31% of firms across UK, UAE, US and Singapore offered the opportunity to work remotely to all those concerned
  • 23% of firms across UK, UAE, US and Singapore had provided access to private medical health checks to all employees
  • 21% of firms across UK, UAE, US and Singapore had banned all travel
  • 30% of firms across UK, UAE, US and Singapore had begun to implement reduced working times
  • 31% of firms across UK, UAE, US and Singapore had suspended work-related events for large groups
  • 33% of firms across UK, UAE, US and Singapore asked those that have travelled to high risk areas to work remotely for 14 days

After the WHO officially declared COVID-19 a pandemic:

  • 12% of firms with over 5,000 employees across UK, UAE, US and Singapore had done nothing according to their employees
  • 48% of firms with over 5,000 employees across UK, UAE, US and Singapore had issued a message of concern to all workers
  • 44% of firms with over 5,000 employees across UK, UAE, US and Singapore had issued a policy on how they were dealing with it according to their employees
  • 48% of firms with over 5,000 employees across UK, UAE, US and Singapore had offered health tips for minimizing the risk and advice for self-quarantine
  • 34% of firms with over 5,000 employees across UK, UAE, US and Singapore had offered the opportunity to work remotely to all those concerned
  • 19% of firms with over 5,000 employees across UK, UAE, US and Singapore had provided access to private medical health checks to all employees
  • 22% of firms with over 5,000 employees across UK, UAE, US and Singapore had banned all travel
  • 25% of firms with over 5,000 employees across UK, UAE, US and Singapore had begun to implement reduced working times
  • 34% of firms with over 5,000 employees across UK, UAE, US and Singapore had suspended work-related events for large groups
  • 24% of firms with over 5,000 employees across UK, UAE, US and Singapore had asked those that have traveled to high risk areas to work remotely for 14 days

Results from 4 March to 27 March:

  • Up until 27 March, only 12% of firms across UK, UAE, US and Singapore had done nothing according to their employees
  • Up until 27 March, 42% of firms across UK, UAE, US and Singapore still hadn’t issued a message of concern to all workers
  • Up until 27 March 46% of firms across UK, UAE, US and Singapore still hadn’t issued a policy on how they were dealing with it according to their employees
  • Up until 27 March, 43% of firms across UK, UAE, US and Singapore hadn’t offered health tips for minimising the risk and advice for self-quarantine
  • Up until 27 March, 62% of firms across UK, UAE, US and Singapore hadn’t offered the opportunity to work remotely to all those concerned
  • Up until 27 March, 81% of firms across UK, UAE, US and Singapore hadn’t provided access to private medical health checks to all employees
  • Up until 27 March only 33% had banned all travel
  • Up until 27 March, 75% of firms across UK, UAE, US and Singapore hadn’t begun to implement reduced working times
  • Up until 27 March, 53% of firms across UK, UAE, US and Singapore hadn’t suspended work-related events for large groups
  • Up until 27 March, 64% of firms across UK, UAE, US and Singapore hadn’t asked those that have travelled to high risk areas to work remotely for 14 days

Source: RealWire