Will the End of the SDLT Holiday Damage the Property Market?

Nothing lasts forever. And, although it seemed for a while that the Stamp Duty Land Tax (SDLT) Holiday might, it has now finally ended as of 1st October. This means that anyone purchasing a property with a value of more than £125,000 will have to pay stamp duty on it. 

Many commentators have credited the SDLT holiday with the resurgent property market we’ve seen in the last year. So what happens now that the holiday has ended? Is the market headed for a major slowdown? 

Is There a Precedent for What’s Happening? 

Yes, very recently. Cast your mind back to March 2021, when the SDLT holiday was originally slated to end. Figures from that time paint a picture of what could happen during the last few months of this year. 

Figures from FT Adviser show that there was a slowdown in mortgage borrowing and property transactions in April (the month after the original end date for the SDLT holiday). At the same time, mortgage borrowing also dwindled. Net borrowing in April 2021 stood at £3.3 billion, down from £11.5 billion in March. 

In addition, HMRC figures show house sales dropped by around 50,000 from March to April of this year. 

Is a Slowdown Inevitable? 

Before we go on, it’s worth adding a caveat. Due to the fact figures are hard to come by this close to the deadline, we simply don’t know the full effect of the SDLT holiday ending yet. We know as recently as August residential transactions were still climbing (up 32% on July) but HMRC is yet to publish figures for September or October. 

However, as we’ve already mentioned, if spring 2021 is anything to go by a slowdown is certainly possible. And, there’s also the effect of the end of the furlough scheme to contend with.

As we discussed in a previous blog, household disposable income is a key factor in housing prices and demand. It’s a simple equation: less disposable income, fewer people buying houses. According to research from Bristol University, a 1% reduction in disposable income has historically led to about a 2% reduction in house prices.

Throughout 2020 and most of 2021, household income has stayed stable – thanks in no small part to the government furlough scheme. Even when GDP took a real battering during the darkest days of the pandemic, household income only dropped slightly. 

Unfortunately, this has already begun to change. The furlough scheme ended last month and the UK is currently on the precipice of a winter fuel crisis, with gas prices quadrupling in the last year. Both events look set to hit consumers hard, meaning less disposable income and (at least in theory) less demand for property. 

So Is There Any Good News? 

This has been a fairly depressing read so far but it’s not all doom and gloom. Here are a few reasons to be cheerful.

Firstly, working habits have changed for good. 20-30% of the population are estimated to be working from home permanently (at least some of the time) by the end of 2021, meaning the so-called ‘race for space’ isn’t going anywhere. Plenty of people will continue to lust after a spare bedroom, garden, or place in the country and this should boost demand. 

Secondly, interest rates remain at record lows and this isn’t likely to change anytime soon. The Conservative government is desperate to avoid an economic crash on its watch and is painfully aware that raising interest rates risks fiscal suicide. So even without the SDLT holiday, it remains a pretty advantageous time to buy property in the UK, provided you have the capital to do it.

Thirdly, the UK still has a supply problem when it comes to housing. While this might be terrible news for first-time buyers or anyone at the lower end of the market, it’s great for house prices. And, it ensures demand stays relatively high, even with the economic clouds gathering on the horizon. 

So what conclusions should we draw? 

Well, a slowdown is possible, perhaps even likely. But that doesn’t have to spell disaster. There are plenty of other factors in play that could help keep demand relatively stable. It’s also important to stress that we shouldn’t read too much into an autumn drop off (if it happens). The property market usually slows down from November onwards anyway, especially after such a frenetic summer.

What’s more, it’s worth remembering just how resilient the housing market has proved throughout one of the most unpredictable periods in modern history. If the last 18 months should teach us anything, it’s to proceed with caution when it comes to doomsday predictions. 

Moving to the Country: Is the Future of the UK Housing Market Rural?

If you live in a town or city, the phrase ‘new build’ probably conjures up one of two images in your mind. For city dwellers, it’s an apartment block, either converted from an office building or built on a former brownfield site. For those in towns, it’s usually the ubiquitous Barratt Homes estate – a maze of cul de sacs built on the edge of town. 

However, while the majority of new-build developments remain in urban areas, there is a new trend towards the countryside emerging. So, what does this mean? 

Greenfield Instead of Brownfield? 

Short of some unforeseen disaster that empties our cities (hello, Coronavirus), there will always be more new homes being built in urban areas than in the countryside. Nevertheless, research from Warwick Estates reveals several rural settings with a high percentage of new builds for sale. 

For example, in sleepy Bishop’s Waltham, nestled in the borders of the South Downs, 25% of all properties for sale are new builds. And similar figures apply to Cowbridge in the Vale of Glamorgan, Wales (22% of the market) Ripon, North Yorkshire (18%), and Wallingford, Oxfordshire (17%).

Although none of the places listed is rural in the purest sense (they’re not tiny hamlets), all of them are small market towns surrounded by some of the best countryside the UK has to offer. 

So what’s happening? Why are local authorities and developers suddenly building homes where traditionally there have been few? Is it a question of space? COVID-19? Or something else altogether? 

Is the Shift Down to COVID-19? 

As we’ve mentioned in previous blogs, the pandemic and the accompanying switch to remote working for many urbanites have whetted appetites for rural property. According to Rightmove, 2020 saw a 78% yearly increase in enquiries about rural or suburban property from people in the UK’s ten largest cities. And there was a 126% increase in interest in village locations. 

So it’s hard to dispute that COVID-19 has had some effect on the desirability of living in the countryside. However, it’s important to note that many of the new builds currently on the market were built (or at least planned) long before we’d ever heard the phrase ‘novel Coronavirus’.

In short, we can expect to see new build developments popping up in rural areas for years to come due to increased demand, but the trend predates the pandemic.

Is it a question of space? 

Some experts have put the surge in rural development down to a simple question of space. To take London as an example, there’s increasing resistance to building more houses on the city’s green belt. This leaves brownfield and former commercial sites as the only real alternative.

It should be noted that there is plenty of room to build on these sites. The Countryside Charity for London estimates there is enough ‘shovel-ready’ brownfield land within the city to build 280,000 new homes. 

However, many of these homes are likely to be high-density housing such as apartment buildings. And, for anyone starting a family an apartment in busy Zone 2 is always likely to be less enticing than a rural starter home with a garden. 

Plus, it’s worth pointing out that these brownfield sites are often in areas with very high real estate values. So not only do developers have to grapple with falling demand from prospective buyers, but they also face competition from commercial projects. 

This means at least some development has to happen elsewhere. 

Or just government policy? 

It’s partly this calculation that has led to some pretty strident government policy on rural constructions. According to an analysis of current planning policy, nearly 400,000 new homes will be built on greenfield sites in the south over the next five years. 

To break this down, that would mean an extra 11,000 homes in uber-rural Cornwall and 10,000 in parts of the home counties such as Bedfordshire and Buckinghamshire. The UK has long had a shortage of rural housing, exacerbated by rising prices. And current government policy is an (admittedly timid) attempt to fix that. 

What does the future hold? 

So to come back to our original question, is the future of the UK housing market rural?

Yes and no.

On the one hand, demand for rural property isn’t going anywhere. COVID-19 has made many of us reassess what we want from a home and provided remote working continues this isn’t likely to change. This, coupled with government policy, should see new build developments continue to pop up in the countryside.

On the other, cities, despite their expense and pollution, are still desirable places to live. What’s more, there are plenty of people for whom London, Manchester or Birmingham are (and always will be) home. So it’s important not to overstate the importance of rising interest in rural homes. 

What’s more likely is a slightly more even distribution of where new builds are built. And would that be such a bad thing? 

How Will the Rise of Remote Working Impact the UK Housing Market?

We’ve all seen the headlines. Rocketing rural house prices, ‘urban flight’ from Britain’s cities, and ‘new normal’ think pieces galore. But what does any of this mean for the UK housing market in the long term? 

Is the shift from urban to rural permanent? And, if so, what does that mean for the future of housing in our cities? 

Remote Working Isn’t Going Anywhere

The first thing to acknowledge is that working from home is here to stay, at least for the foreseeable future. According to the Office for National Statistics (ONS), the number of people working from home has doubled in the last year. Roughly a quarter of workers (25.9%) worked at home at least some of the week, up from 12.4% in 2019. 

For many of those workers, the change is likely to be permanent. Almost all of the UK’s top fifty businesses stated that they had no plans to bring staff back to the office full-time when asked by the BBC. And some estimates put the number of people set to switch to permanent remote working as high as 1 in 4. 

It’s not hard to see why this is happening. Few of us miss the grind of the early morning commute or the expense it brings with it. At the same time, we’ve all grown used to spending more time with our families, getting out of bed later, and having more time for leisure. 

Meanwhile, for many businesses, it’s a no-brainer. Happier workers are more productive workers. And switching to permanent remote working means either no office or a much smaller one – dramatically cutting real estate costs. 

So, while some high profile business figures (not to mention commercial landlords) may view working from home as an ‘aberration’, all the evidence points towards remote work (at least some of the time) as the new norm. 

A cautionary note 

Although the figures tell an interesting tale about changing working habits, they don’t tell the whole story. Whether people have spent the last year working from home or not largely depends on where they live and what they do.

To illustrate, according to the ONS report we mentioned earlier, 46.4% of people working in London said they’d worked from home at some point during 2020. And these people were largely concentrated in affluent suburb. Or, in other words, where white-collar workers tend to live. For example, more than 70% of people in leafy Richmond upon Thames said they’d worked from home during the last year. 

In contrast, home working was least common in Burnley, Middlesbrough and rural Scotland (all 14%). So it’s important to stress that remote working is very much a major city, or even London-based, phenomenon. 

Demand is Changing

With many office workers facing a future working from home, London (and many of the UK’s larger cities) have lost some of their appeal. Why live in or very close to London, with its expensive housing, pollution and lack of space, when you don’t need to commute to the office? And after spending most of 2020 inside, it’s understandable why many people have decided a garden or access to open spaces is no longer a nice-to-have. 

Add to this that people also need a property with a home office, often for two people, and it’s not hard to see why demand is shifting.  

What’s more, this is borne out by the figures. According to Rightmove, 2020 saw a 78% yearly increase in enquiries about rural or suburban property from people in the UK’s ten largest cities. And there was a 126% increase in interest in village locations.

This trend is evident wherever you find a large concentration of office-based workers. Liverpool saw a 275% increase in people looking for property in villages, Edinburgh 205%, and Birmingham 186%. Meanwhile,  Hamptons estate agents report that 63% of new purchases in Tandridge in Surrey and Sevenoaks in Kent have been bought by fleeing Londoners. 

What Will Happen to Our Cities? 

Traditionally, it’s been potential buyers in urban centres that were more likely to be met with high prices and soaring demand. But perhaps that’s no longer the case. The process many are calling ‘urban flight’ has led to property values in less densely-populated areas rising twice as fast as within cities. 

Research from the Resolution Foundation revealed that since February 2020 prices in the ten least-populated local authorities have increased by more than 10%. That’s compared to a 6% rise in major cities. 

So what does this mean for the market in our cities? Is this change permanent? Are we about a see a continuing exodus from the urban to the rural? And are prices in cities set to plummet? Let’s consider each in turn.

First, the switch to remote working is likely to be permanent for at least some people. This means that demand for rural and suburban property will probably remain high for a while to come. However, it’s important to state that the number of people working from home is still far from a majority.

There are plenty of people for whom living in the city is still appealing, and even more who have little choice but to stay. Lifelong urbanites and those with close family ties are unlikely to up and leave. Likewise, the half of Londoners who don’t work from home are also likely to stay. 

The young will still find London, Manchester and Birmingham exciting places to live (especially as nightlife returns). And for many people, moving to the increasingly expensive countryside just isn’t financially feasible without moving hundreds of miles from the cities they know and love.

This brings us nicely on to prices. While it’s true house price growth in urban centres have dipped slightly, they haven’t crashed. For example, the average price of a London home dropped 2% in April and the capital is experiencing the slowest growth of any region in the UK. However, London has been experiencing negligible growth in house prices since its post-financial-crisis high in 2017. And the 2% dip is just as likely to be caused by a fall in demand after the stamp-duty scramble as it is grand shift to countryside.  

Add to this that the UK’s major cities remain very attractive locations for property investors and it seems doubtful we’re about to see a major price fall. Our cities may become slightly more affordable and a little less densely populated, which is no bad thing. But any talk of a seismic shift in the residential property market is a little overstated. 

Is the Housing Market Heading for a September Slowdown?

To say the housing market has surprised us all in the last year would be an understatement. We’ve seen prices increase at their fastest rate since 2014. We’ve witnessed a record average house price of £336,073 for England and Wales. And all of this has happened while the UK’s GDP (usually such a reliable barometer for how housing is set to the fare) has plummeted. 

However, nothing grows forever. Economists of all stripes agree that the housing market is due to slow down at some point between now and late 2022. Even the Bank of England, hardly know for its alarmist nature, recently described the market as “on fire” and “feeding inflationary forces.”

The question is, when? 

What Do the Figures Say? 

According to the Reallymoving House Price Forecast for May, the market’s stratospheric growth will continue for much of the summer. However, the forecast also predicts that the monthly rate of growth will dwindle to just 0.4% in August. 

Likewise, RightMove lists June’s growth of  0.8% as significantly smaller than May’s (1.8%) or April’s (2.6%). The online real estate portal has described this as an early sign that the past few months’ rapid growth may finally be slowing. 

Why September?

There are a couple of reasons why September is the most likely month for the slowdown to take effect. 

The first is the stamp duty holiday. Up until 30th June, stamp duty was only paid when the purchase price exceded £500,000. But from the 1st July, this threshold has reduced to £250,000 and will revert back to the standard cap of £125,000 on 1st October. So, all that considered it’s reasonable to describe September as the end of the stamp duty holiday (provided, of course, it isn’t extended again). 

This is important because, for many commentators, stamp duty has been a key driver of demand since the turn of the year. By September, most of this demand will have dried up and the holiday will be in its final few weeks, meaning anyone still thinking of buying by then will likely hold off.

It’s hard to predict exactly how the market will look once this booster is removed, but we can say with some certainty that it’ll be considerably less hectic. 

The second reason is something that doesn’t get enough coverage, but could prove very important. Ask any economist and they’ll tell you that household disposable income is a key factor in housing prices and demand. It’s a pretty simple equation: less disposable income, less people buying houses.

Throughout the pandemic, household income has been held relatively stable due to the government’s furlough scheme. In fact, so much so, that even when GDP took a huge hit household income stayed relatively stable. This could all change once the furlough scheme ends in September. 

According to research from Bristol University, a 1% reduction in disposable income has historically led to about a 2% reduction in house prices. So, even in the event the economic fallout from the end of the furlough scheme is small, we’re still likely to see some reduction in house prices and demand. 

Does This Mean a Crash? 

With everything we’ve covered so far, you could be forgiven for feeling a little nervous. Does this mean we’re heading for a 2008-style crash?

Not necessarily.There is a very pessimistic reading of our scenario which posits that the end of the stamp duty holiday will lead to a credit-driven housing bubble bursting spectacularly. In this scenario, the crash rips through the UK financial system and plunges us into another recession. 

If you’re feeling masochistic, this piece from the Guardian is an excellent introduction to how it could happen. 

However, as we mentioned, that’s a very pessimistic scenario. The optimistic view is house prices and demand drop slightly or flatten but this doesn’t lead to anything more serious. The market remains reasonably buoyant due to our changing working habits and the demand this creates for property outside of major urban centres. 

Which scenario plays out over the next few months is impossible to predict and making grand proclamations is probably unwise. However, it should be said there is still plenty of room for optimism. The housing market has proved resilient throughout one of the largest shocks in recent human history. Who’d bet against it doing so again? 

Is the 95% Mortgage Scheme a Lifeline for First-time Buyers?

Although it was announced to little fanfare back in February, mid-June will mark two months since the government-backed 95% mortgage scheme launched.

Intended as a leg-up for ‘generation rent’ – that’s most people under the age of 40 – the scheme allows first-time buyers to purchase a property up to £600,000 in value with a 5% deposit. The scheme has been taken up by Lloyds, Santander, Barclays, HSBC, NatWest, and Virgin Money, all of whom have launched mortgages

The scheme is effectively a government-backed shot-in-the-arm for first-time buyers and lenders. Under the scheme, the government has committed to compensate the lenders for some of the net losses should a repossession occur. This guarantee applies down to 80% of the purchase value and is valid for seven years after the start of the mortgage. 

So far, so good. But does it really offer the lifeline the government promises? 


Let’s start with the positives. On a very simplistic level, yes, the scheme does offer something to buyers. It could make what Americans call ‘starter homes’ much more affordable for first-time purchasers.

Think of it this way. A young and aspiring twenty-something couple with a deposit of £10,000 could, in theory, purchase a property with a value of £200,000. In parts of the North East, North West, East Midlands, Yorkshire and Wales that’s enough to buy you a decent home. Even in the far pricier south, a £20,000 deposit would be enough for a £400,000 property.

Both of these figures would still require years of gruelling saving, help from mum and dad, or some form of inheritance for most first-time buyers. However, it is much more achievable than the traditional 10 or 15% new homebuyers are used to being quoted. 

For lenders and the conveyancing industry, the scheme has virtually no downsides. Lenders can appeal to a segment of the market they’ve long struggled to attract – with all the risks covered by the state. And, conveyancers, get an influx of new instructions from the bottom end of the market to complement those at the top end purchasing due to the SDLT break.

But is the scheme all it seems? 


Unfortunately, as regular readers of this blog will have anticipated, there is a catch. While the scheme is commendable in its intent, it also has a few glaring flaws.

The first and most obvious problem concerns housing stock, or the lack thereof. Offering affordable homes to first-time buyers is a nice idea.  However, without the housing stock to back it up, it remains just that. Government estimates put the number of new homes needed in England at up to 345,000 per year. The total number built last year was 244,000 – a 1% increase from the year before, but still a huge shortfall. 

That leads us on nicely to our next point, another problem with the scheme is house prices themselves. As we’ve already mentioned, a 5% deposit is much more attainable than 10 or 15%, however, that largely depends on where you live. As of January 2021, the average house price in inner London is £514,000. That requires a 5% deposit of £25,000 – still a huge sum for many twenty and thirty-somethings already paying out a large portion of their salaries in rent. 

And then we come to the issue of ‘value not price’. Borrowers should be aware that when a lender offers a 95% mortgage, they are doing so on the lender’s valuation, not the price. To give an example, a borrower could purchase a house for £250,000 but, if the lender’s survey values the property at £240,000, it’s down to the buyer to find the extra £10,000. Admittedly, the scheme hasn’t been running long enough for us to assess how common these disparities are, but it could pose a tricky barrier to entry for new buyers. 

The last major problem with the scheme is that it isn’t recession-proof, as the government won’t cover lenders or buyers should the property slip into negative equity. That might sound pessimistic given the current buoyancy of the market, but it doesn’t hurt to guard against any eventuality. This is particularly true when it comes to first time buyers, many of whom won’t have the capital to weather another economic downturn. 

The Scheme Must Go Further 

What conclusion can we draw? Is the scheme a rip-roaring success or floundering dud? 

Well, it’s a little of both. On the one hand, any support for first-time buyers is welcome. It’s too early to assess how many buyers will take up the offer, but it should help some at least. What’s more, for those living outside of high-value areas it does represent a decent leg-up into property ownership.

On the other hand, the scheme is unlikely to help anyone living in expensive cities like London. And, until the lack of housing stock is addressed, this isn’t going to change. At the moment the scheme feels a little like a sticking plaster applied to a gaping wound; it’ll doing something to help but not nearly enough. 

So what needs to be done? 

Schemes like the 95% mortgage must be rolled out in conjunction with building more homes to be truly effective. At the same time, something needs to be done about spiralling living costs and stagnant real wages in the UK. As it stands, the bar simply isn’t low enough for many people under the age of 40 to even consider owning their own home. And until these problems are addressed the affordable housing crisis will continue, no matter how generous the mortgages on offer. 

SDLT Extension or Lockdown Easing – What’s Behind the Sudden Surge in Transactions?

Is the ease in lockdown restrictions just the tonic the property market ordered? On the face of it, it looks like the answer is a resounding yes. At the time of writing, new vendors have surged to 67% above the April average, 242% higher than during lockdown last year and 56% up on 2019. 

But is something else at play? Could the sudden swell in transactions be down to the UK government’s extension of the stamp duty land tax (SDLT) holiday? Or, is it down to a very auspicious combination of the two? 

Lockdown easing 

Things are beginning to feel like something approaching ‘normal’, aren’t they? Whether it’s being able to see your family after months apart, engaging in some retail therapy, or just the simple pleasure of a swift pint at your local, many of the little things we call ‘everyday life’ are on their way back.

The same appears to be true for the property market. According to the latest data from the Yomdel Property Sentiment Tracker, the week directly after the Easter break saw a glut of new vendors pile into the market in anticipation of the ease in lockdown restrictions across the UK. 

Online activity has been unusually high, with Yomdel recording the numbers of people visiting estate agents websites at 184% higher than the second week of lockdown in 2020, and 34% higher than the equivalent week in 2019. At the same time, new vendor enquiries leapt up some 40% and buyer enquiries rose 17% to their highest level since late July last year. 

The simple explanation for these numbers is that after biding their time through months of uncertainty, both buyer and seller confidence is returning to the market. People feel safe not only visiting properties or allowing prospective buyers into their home but also in starting the lengthy process of a housing transaction. 

However, the property market is rarely simple and there’s another factor we need to consider. 

SDLT holiday 

Last month saw a bout of ‘March madness’ as many homebuyers desperately scrambled to meet the SDLT holiday deadline on March 31st. Data released by HMRC last week reveals that
March 2021 had more than double the number of transactions of the same time last year for England, and almost the same for Wales.

In England, transaction figures hit 155,080, compared to the 74,490 in March 2020. For Wales, the total for March reached 8,170, close to double the figure for 2020.

We’re yet to see figures for April, but we’ll likely see more of the same. Chancellor Rishi Sunak has extended the stamp duty holiday until the end of June 2021, with plans to taper its eventual wind down until the end of September. Many vendors and homebuyers who would have put transactions on ice for fear of missing the March deadline are now likely to pick up where they left off, potentially driving figures higher still throughout April and May. 

A combination of the two?

So which is it? Is the property market’s current purple patch being driven by the SDLT holiday or easing restrictions?

The truth is, it’s probably a little of both. The SDLT holiday has undoubtedly turbocharged the market as buyers clamour for the best possible deal. However, none of this would have been possible if people didn’t feel safe, both financially and physically, engaging in a transaction.

It’s probably best to see the current moment in the conveyancing industry as something of a perfect storm. Two equally important factors have coalesced at just the right time to create very favourable market conditions. 

But like any storm, present trends do have the power to be destructive…

A note of caution 

For all the optimism about the market, it wouldn’t be this blog if we didn’t conclude on a cautious note. And unfortunately, there are a few things to be cautious about.

First, is what happens when the SDLT holiday does finally come to an end. From late May onwards, transaction volumes could begin to dwindle as the impact of the holiday on demand slows. Current activity is predominantly driven by buyers with high levels of housing equity, most of whom will have taken advantage of the SDLT holiday by the end of May. 

Meanwhile, for the average buyer, and those just entering the market, June will come far too soon for them to take advantage of the higher threshold. This could lead to many buyers holding fire on making a purchase. Add to this that the UK has a chronic shortage of housing stock and ongoing uncertainty caused by the pandemic, and it’s not hard to foresee a scenario in which the last few months’ activity turns out to be little more than a mini-bubble. 

It’s to be hoped that what we’re seeing are the green shoots of a full-scale recovery. However, as long as economic uncertainty prevails it’s worth approaching even the most fantastic transaction figures with caution. 

Official or Regulated Local Authority Search – which is right for your move?

A local authority search is the most common search required when purchasing a property. It provides a cross-section of all the information held by the local council about your property, including:

  • Local Land Charges Registrations (LLC1)
  • Any planning permission granted, refused or pending
  • Building control regulations
  • Public use of the property’s land
  • Highways information
  • Road schemes near the property
  • Rail schemes near the property
  • Radon gas 
  • Whether the property is part of a conservation area
  • Contaminated land

If your purchase is funded by a mortgage then, in most cases, you’ll need to get a local authority search as a condition of lending. In the same way that you wouldn’t be thrilled to discover your new home has subsidence problems, lenders need to know about anything that could impact the future value of the property.

There’s currently no obligation for cash buyers to get a local authority search done. However, it’s strongly recommended you order a search regardless of how you’re funding the purchase. After all, no one wants to move into a new home only to discover there’s a public right of way through the garden or the property is built on contaminated land. 

What’s the Difference between Regulated and Official Searches?

An official regulated search or OLAS is compiled by the local land charges department at the council. A regulated search uses the same data but is compiled by a search agent or company (like PIC). The information contained in a local authority search is public record so, in theory, anyone could compile one but you need to know what you’re looking for and where to look.

The Case for Official Local Authority Searches 

It was once the case that OLAS were the preferred version of local authority search for most mortgage lenders. And, although most now accept or even prefer a regulated search, there are still some lenders who insist upon buyers purchasing an official search. 

The reasons for this go back a long way. Up until the early twenty-first century, there was a perception that regulated searches were unreliable or somehow ‘less valid’ than a search carried out by the council. The price also has something to do with this. OLAS are typically more expensive than regulated searches, so it was easy for many to assume that higher cost meant higher quality. 

Alongside this, some felt OLAS offered greater protection should anything go wrong. The local authority is held liable for any losses incurred as a result of a search being completed incorrectly.  And this led to the assumption that it would be far simpler to make a claim in the event of an error. 

Thankfully, this mindset has changed and, as we’ll see, there are plenty of reasons why purchasing a regulated search may be the best fit for you. 

The Case for Regulated 

The rise of regulated searches can be traced back to one thing: local authority turnaround times. Regulated or (as they were formally known) personal searches first appeared on the scene back in the 1980s. At the time, some local authorities were taking weeks or even months to return a search, causing hundreds of aborted transactions. 

Regulated searches have always been faster and more cost-effective, due to the smaller workloads managed by search agents and the fact they can focus on just compiling searches. However, in the past, they weren’t always as reliable as they could have been.

That’s no longer the case. The regulated search industry has its own trade association and regulatory body, COPSO. As a result, any report carrying the COPSO watermark comes with assurances that it’s of equal, if not higher, quality than any official search. 

But it’s not just the quality of regulated searches that has improved. Most search companies now offer PI insurance as a standard bolt-on for every regulated search. For example, at PIC, all our regulated local authority search reports carry £5 million of insurance coverage. There’s no need for a protracted court case with the local authority or a battle to prove liability. Instead, you know you and your property are covered.

As we mentioned earlier, regulated searches also tend to be quicker than OLAS. Search agents aren’t trying to do several jobs at once and we can offer flexibility and prioritise urgent jobs in a way that councils can’t. What’s more, with a smaller workload and, in many cases, better resources a search agent can take the time to answer any questions you have and keep you updated every step of the way. 

And then, there’s the cost. Depending on where you are in the country, your local authority could charge anywhere between 2 and 3 times as much as a search company. It’s worth pointing out that this is still exactly the same search, it just costs more money. Search agents, on the other hand, will usually charge a flat fee no matter where you are in the country, so there’s no financial penalty for living in an expensive local authority. 

To draw some sort of conclusion, the search you choose will likely come down to your lender, but there are plenty of reasons to go regulated. If you do, always look to work with a reputable agent and keep an eye out for companies that are COPSO affiliated and offer insurance with each search. 

If you’d like to know more about conveyancing searches, please get in touch, we’d love to hear from you. 

What Will Happen to All the UK’s Empty Buildings?

Regardless of your political loyalties, it’s hard to deny that the UK has a housing shortage. A 2019 report from the National Housing Federation estimates that Britain needs 340,000 new homes every year, including 145,000 social homes, to meet the housing demand.

However, underpinning the UK’s housing crisis is a seldom-covered secret. While new houses are needed, Britain currently contains hundreds of thousands of unused residential and commercial properties – a trend that’s only been accelerated by the COVID-19 pandemic.

How has this happened? And what will happen to Britain’s ghostly cityscapes of empty high streets and residential developments?

Residential property 

The huge number of empty residential properties in the UK is surprising. After all, we’re often told we’re in the midst of a housing crisis and this conjures up mental images of a residential sector bulging at the seams. 

However, as of September 2020, 268,385 properties in England have been left empty for more than six months according to government research. If we dig a little deeper into this figure, we turn up some truly mind-boggling statistics. For example, in the London Borough of Camden, 

9,595 homes remain out of regular use, accounting for one in 12 properties in the borough. What’s more, the latest figures represent a 20% increase on 2019 with over 40,000 more homes being left empty.

So why is this happening?

Well, while it might seem like madness to many of us, there are several reasons why a residential property may not be rented or sold. 

Let’s start with the simplest. One of the most common reasons a property is empty is because the owner can’t raise the capital to do the property up to let it out or sell. Many of Britain’s empty homes are in varying states of disrepair and, for the owner, renovating may outweigh the returns they’re likely to receive in rent or by selling the property. 

Take, for example, properties in former industrial heartlands and coastal towns. Towns and cities like Portsmouth, Middlesborough and Hartlepool consistently rank among the highest for empty homes. The equation is simple; renovation costs are high, while house prices and rents are low in comparison with other parts of the country. This offers little incentive for landlords to do the work needed to make the properties habitable.

The same is true of council-provided social housing. The public sector has spent much of the last 15 years battling one form of austerity or another. And slashed budgets have made it difficult for local authorities to allocate the funds needed to renovate dilapidated post-war social housing. This means that the properties either stand empty, decaying further each year, or the land is sold off to private developers who then use it to build new complexes with minimal social housing. 

These problems in social housing and rental properties are coupled with issues at the 

top end of the market. Take a look at the skyline in any major city and you’ll see plenty of gleaming new-build apartments. From luxury flats in converted offices to bijou maisonettes in former industrial buildings, redevelopment has become the watchword in our biggest cities. The only drawback is that many of them are empty. 

There are a few reasons for this. Many of these ‘investment’ properties are simply too expensive for locals to buy or rent. And those who can afford to buy will often pay a premium for an unused apartment, so it makes sense to leave the property empty until the ‘right’ buyer can be found. Even if an investor is interested in letting it out, the costs involved such as wear and tear and administration can outweigh any money made in rent. 

Another reason for empty properties is the nature of many of the investors behind the developments. For some time now, property in Britain’s major cities (London in particular) has been seen as a risk-free investment for foreign capital. For these investors who live outside the UK, simply owning a chunk of London real estate is the ultimate aim. The social utility of the property doesn’t come into it. 

Commercial property 

While it’s happened much more quickly than on the residential side, the commercial sector is going through its own ‘empty buildings’ crisis. 

The High Street is in terminal decline, leading to a glut of empty retail space in our towns and cities. For instance, the collapse of retail giants Debenhams and Arcadia (Topman, Topshop and Dorothy Perkins) alone has led to 15m square feet of space appearing in the commercial rental market. And with many brands moving operations online, it’s not clear where tenants or buyers will come from. 

At the same time, COVID-19’s impact is being felt well beyond the high street. Many businesses were forced to adopt remote working last March and, for some, it’s sparked the realisation that they can do away with some or all of their physical office space without impacting productivity. Of course, we’re unlikely to see businesses stop using commercial spaces completely – meeting spaces will still be needed – but things have changed. 

This leaves commercial landlords with a big problem. What to do with the sudden surplus of office space, when it’s likely demand will never return to pre-pandemic levels?

What should be done? 

Perhaps not surprisingly, the answer to solving the UK’s empty property crisis is as complex as the problem itself. 

For residential properties, something needs to be done to incentivise owners and investors to bring empty units onto the market. Solutions could include grants for renovation, tax cuts, or, at the other end of the scale, state-led requisition and compensation schemes to bring the stock into public ownership. However, these solutions depend on proactive government intervention on both a national and local level – something that has long been lacking. 

Alongside this, legislative action needs to be taken to ensure that properties in high-demand areas are purchased as homes and not, as Boris Johnson once termed them ‘blocks of bullion in the sky’. Such a scheme could include buy-to-let properties. What’s important is not the ownership of the property per se (although, making housing more affordable should be part of the goal) but that someone actually lives in it. 

Similar action also needs to be taken in the commercial sector. The high street as we know it is gone and so too is the traditional office. So it’s time to consider alternatives. Former retail property could be transformed into community spaces or incubators for small businesses. Office space could be given over to charities, food production or residential units. 

A great example of this in practice is the ‘Preston model’. The experiment in ‘community wealth building’ saw Preston council work alongside local businesses to transform a dilapidated city centre into a place voted ‘the best place to live in the North West’ in five short years. 

It might sound idealistic, but initiatives like the Preston model are exactly what we need if we’re to end the UK’s crisis of empty homes and high streets. Change won’t be easy or fast. But, the alternative is to ignore the problem and hope forlornly that the supply of new homes can one day catch up with demand. 

We already have enough empty properties to home thousands of people, let’s use them. 

What Will Happen to the Housing Market When the Stamp Duty Holiday Ends?

One of the few silver linings of the last year has been the resilience of the housing market. Despite predictions of a major slow down or even a crash, the sector has rebounded with a speed that’s surprised us all. 

What consultancy Oxford Economics has called ‘a very peculiar housing boom’ has so far relied on a perfect storm of favourable factors. These include typical home buyers (often middle-aged and financially secure) being less likely to lose their jobs, foreign capital continuing to flow, pent-up demand following the first lockdown, and the stamp duty holiday unveiled by Chancellor Rishi Sunak back in July 2020

This has allowed the UK housing market to remained relatively insulated from the travails of the wider economy. And even post some frankly astonishing figures, such as the Nationwide building society’s October report which revealed an annual price growth rate of 5.8% – the highest in six years. 

However, a central plank of the market’s recovery is set to be removed in just over a month. March will see the end of the stamp duty holiday and, as yet, there are no plans to continue it. So, what does this mean for the market? Can we expect it to remain buoyant? Or are we set for another fall? 

The Case for a Crash 

Unfortunately, we have to start by looking at the worst-case scenario. The sudden removal of a policy that has provided a fuel injection to a flagging market could spark a collapse in house prices.

The problem is that, although the end of stamp duty alone probably isn’t enough to cause a full-scale crash, when combined with other factors it might. The UK has rising unemployment, economic uncertainty, and a falling population in London. And all of these things are also likely to reduce the number of potential homebuyers and put the squeeze on demand.

In particular, the 700,000 people to have left London since the outbreak of the pandemic is a real worry. Many of these people are young, EU nationals who – due to Brexit – aren’t necessarily going to return once COVID-19 is brought under control. These people along with their British-born counterparts (who due to the normalisation of remote working also have less incentive to return) are crucial to London’s rental market. 

Without them, we could see a glut of former buy-to-let properties being put on the market as the renting loses its allure for landlords. This, in turn, would drive prices down across the board.

When you combine this with unemployment and the end of the stamp duty holiday, it suddenly looks like another perfect storm gathering – only this one could crash the market instead of saving it. 

Reasons to be cheerful 

Now, for some reasons to remain upbeat. First, the current Conservative administration has a penchant for last-minute decisions on crucial fiscal policy, especially when there’s public pressure involved. For evidence just look at the U-turns on extending the furlough scheme or free school meals. Even if at the moment an extension of stamp duty exemptions looks unlikely, that might not be the case come March.

Alongside this, although we’re almost going to see some drop-off, many, many things have to go wrong for a full-scale crash. For the market to really be in trouble, we’d need to see home buyers facing severe difficulties paying their mortgages. This typically happens for two reasons: an increase in interest rates or large-scale job losses amongst the middle-aged and middle class. 

With interest rates at record lows, the former is very unlikely. As for unemployment, it is true the UK is facing a crisis. However, thus far, job losses have mostly been confined to hospitality and service sectors, both areas of the economy that typically employ young and disadvantaged people who aren’t likely to purchase a house any time soon. Whatever this says about our society (and it is damning), it at least provides some hope that homebuyers, who typically have excess capital such as savings, might emerge relatively unscathed. 

Finally, while it might not look like pretty right now, would a slowdown leading to a drop in prices be the worst thing for the market long-term? It could offer a way into the lower end of the market for first time buyers and, in time, push demand back upwards a little more fairly. Perhaps a slowdown in 2021, painful though it might be, is the correction the market needs to return to better health in 2022.

For now, we wait to see what the Ides of March bring. 

How Will the New Tier System Affect Conveyancing Turnaround Times?

Depending on where you live in the UK, the last few days have either been a long-awaited chance to see loved ones, eat in a restaurant, and engage in some retail therapy or the beginning of another long period inside. 

But while we’re all aware of the social and personal costs of the government’s new COVID-19 tier system, there’s been less written on its impact on individual sectors of the economy (outside of retail and hospitality). And you’ll find even less information on what it means for conveyancers.

We’ve discussed COVID-19’s likely effect on house prices and market activity in previous blogs. This is largely because it’s far easier to find data at the macro level of the market. A simple Google will tell you most of what you need to know. 

However, conveyancing has always been a business dependent on speed So, this week, we’re looking at the possible effect of the new tier system on turnaround times. And, because this can either mean the time local authorities and search providers take or transaction times themselves, we’ll take each in turn. 

Local Authority Turnaround Times

The speed local authorities can turn around official searches has always been highly variable. For example, if you’re moving within Boston Borough Council’s catchment, your local search can take up to 34 working days, whereas if you’re moving to York it’ll take just one day. 

Even within a single city, lead times can fluctuate wildly. If you’re moving to Hackney, it’ll take on average 141 working days to get a completed search. But if you’re heading west to Hammersmith it’ll take less than a tenth of the time.

While it might be frustrating for homebuyers and anyone involved in the conveyancing process, it’s sadly a natural part of working alongside public sector bodies. Local authorities have different levels of funding, workloads and staff numbers. Hackney Council could be dramatically slower than Hammersmith for any number of reasons. But it’s due in part to it being one of the largest London boroughs and the site of rapid redevelopment – stretching the staff at the local land charges. 

COVID-19 simply exacerbates the inequality between local authorities, many of whom will have had to furlough staff or adopt remote working, not ideal working conditions for any organisation. And things are even harder for those councils in tier 3 areas who are subject to tighter restrictions. 

Local authorities such as Liverpool, Leicester and West Lancashire that currently complete searches reasonable quickly are likely to see a slowdown while under restrictions. Again, this could be for several reasons. For instance: staff shortages due to furlough and sickness or attempting to fulfil their search obligations remotely with all the technical problems that entails.  

Personal or regulated search businesses may be able to pick up some of the slack. We’ve long been lauded for our ability to pull rabbits from hats and turn searches around faster than local authorities. What’s more, at least some of the information is held digitally by the Land Registry, removing some of the need to go to the local authority. 

Nevertheless, without proper access to local authorities’ CON29 data, it’s tricky. So, expect delays in some areas to worsen until early 2021. 

Search Providers

What about all the other searches that go into the conveyancing process? Water? Coal? Subsidence? 

Well, although we won’t name names, much like local authorities some of the businesses who produce these searches are struggling. Some are in areas with stricter lockdown measures preventing staff attending the office. Others have staff shortages due to furlough schemes or, in the worst cases, redundancies. 

Naturally, these conditions lead to slower services and delays. We’ve yet to encounter delays on the scale seen at local authorities, but it’s clear some businesses are having a tough time of it. 

Transaction Times

Finally, let’s take a look at overall transaction times. 

Interestingly, transaction times have been providing conveyancers with some all-too-rare good news during the pandemic. Lead times have slowed, Investec, HSBC and Santander have all reported delays. And, as a spokesperson for the Building Societies Association (BSA) told Today’s Conveyancer

“Clearly resource management amongst all parts of the chain has been key – particularly as everyone has been impacted by the number of staff who need either to self-isolate or who are unwell because of the virus. Buyers and sellers contracting the virus or needing to self-isolate have also been a factor.”

However, delays have been small, usually in the region of 1-4 days on average and the outlook is getting brighter by the day. Many of the same banks and building societies we mentioned earlier are now reporting improvements, with some even stating lead times are within the normal range. 

There are understandable concerns about the impact of the new tier system on lead times. Conveyancing has always been a bit of a postcode lottery, with the time it takes to complete heavily influenced by where you’re moving to. And the pandemic has indeed worsened some of the industry’s existing problems. 

But despite this, the industry has managed a once-in-a-generation disruption far better than many would have predicted. So, with a vaccine just around the corner, perhaps we should view the tier system as one last hurdle to clear before normality can resume. Of course, delays are inevitable and it may well take some local authorities until summer 2021 to clear their backlog, but the future suddenly looks much more hopeful.