Factors that impact the UK property market in 2021
As we enter the first quarter of 2021, we can still see the after-effects of the Covid-19 pandemic on the UK real estate market.
14:23 07 May 2021
While there was a significant lag in the market during the first lockdown in 2020, we did see a mini-boom in the real estate sector once the lockdown lifted. During the second and third lockdown, real estate activities continued to peak, but the real estate market was nowhere close to the pre-Covid era. While no one can predict with any certainty what the future of real estate holds in 2021, here are some prominent factors that will impact the UK property market in 2021.
Continuation of stamp duty holiday
The UK government announced a stamp duty holiday in 2020, a temporary suspension of the stamp duty tax. That meant prospective buyers and investors could save thousands of pounds on their purchase by simply eliminating the need to pay stamp duty. However, thanks to the success of this scheme, the UK government has further extended the stamp duty holiday till June 2021 and will further be tapered till September 2021. Whether or not the UK government will continue this stamp duty holiday after September 2021 and how the real estate market responds to the current extension of the stamp duty holiday are two factors that will impact the UK property market.
Change in buyer demand
Earlier, potential buyers and investors were looking to buy properties in the city centre and metropolitan areas. Now, as more and more people started working from home, buyer demand has changed. The buyers' priority has shifted from city centre homes to spacious homes with outdoor spaces, open areas and gardens. Some buyers are even looking at properties with extra bedrooms or garage spaces to convert into work from home offices. However, many continue to work from home. It is expected that the demand for properties in the suburbs and boroughs will continue to rise as the properties in these areas are spacious and relatively more affordable. If you’ve been thinking about purchasing a property in the suburb, get in touch with estate agents in wolverhampton for fully supported local help.
Impact of Brexit
There are two schools of thought when it comes to Brexit. Some experts believe that Brexit will not significantly impact the UK’s housing market and real estate market. On the other hand, experts believe that the uncertainty around the Covid-19 pandemic coupled with the ending of the stamp duty holiday and rising unemployment and the consequences of Brexit will eventually impact the housing market. Significant decline is predicted in real estate activity due to these factors.
Introduction of the mortgage guarantee scheme
The Chancellor announced that the UK government would be starting a mortgage guarantee scheme under which potential buyers will be able to apply for mortgages by paying just 5 per cent of the deposit. During the Covid-19 pandemic, low deposit mortgages had become very uncommon. Also, bankers and lenders had become very strict about their lending criteria which meant that most people could not apply for a mortgage. Now, more and more potential buyers can make the most of the mortgage guarantee scheme, which will eventually boost the UK housing market.
Increase in buy to let investments
Experts are predicting a significant increase in buy to let investments in 2021. This could be due to a change in housing priorities for homeowners and first-time buyers or because people would prefer to rent properties instead of spending thousands of pounds on buying their new home during the uncertainty of the pandemic. Whatever the reason, it is expected that there will be an increase in demand in the buy to let properties, especially in boroughs and suburbs, as most homeowners and potential tenants are choosing to live in bigger homes and more open and spacious places.