Assessing the Stamp Duty Holiday.

Last week’s announcement of a holiday for stamp duty land tax (SDLT) on properties seems an obvious fillip for the housing market. Implemented as part of Chancellor Rishi Sunak’s summer statement, the tax break means that until 31st March 2020 anyone buying a home will only be required to pay SDLT if the value of the property exceeds £500,000. So far, so positive, but will the cut will have any long-term impact on the market. Is it anything more than a sticking plaster on a wounded economy? Starting off with some optimism; any extra stimulus of the market is welcome, particularly after the cryogenic freeze Covid-19 applied to it. 

What’s more, so far it’s worked. Rightmove has reported traffic to its listings increased by 22% immediately in the wake of the chancellor’s announcement of the £3.8bn tax. The property website said it received 8.5m visits, the highest in its 20-year existence. The number of people phoning and emailing estate agents via the site also hit a record high and was up 93% on the same day in 2019.

The announcement met with similarly spectacular results across the whole industry, with everyone from comparison site Zoopla to estate agents Winkworth reporting a dramatic uptick in interest. 

All of this points towards a short-term boost for the housing market. Add to this that positivity was rife in the market before the SDLT announcement, and the short-term forecast for property looks decidedly sunny. 

However, as always, there are some potential drawbacks to the scheme. The first is a question of fairness. While the SDLT cut is a welcome relief for the industry, it seems highly unfair that those who purchased property since the start of lockdown proceedings in March – at the urging of the government – aren’t subject to the same benefits. Do those people who risked infection and financial uncertainty while making their contribution to the health of the market not also deserve a break?

Of course, any scheme like this needs to be time-limited, but how hard or costly would it be to backdate the tax break – as many conveyancers are calling for – to the beginning of the lockdown period? 

The second major drawback is the scheme’s focus. We shouldn’t ask too much of a tax break, it’s not designed to be a root-and-brach overhaul of housing policy, but it is worth asking who is this for? 

The policy does little to address the housing market’s fundamental problems. The industry still faces issues with supply, mortgage availability, rising house prices, and high barriers to entry for first-time buyers (who, incidentally, are likely to be hardest hit by an economic downturn). 

This seems compounded by the fact that the measures extend to help those buying a second home or investment property. Is this really the part of the market that needs a leg-up?

Finally, it’s worth asking whether the reduction is enough to spark the confidence potential buyers need to sign up to the long-term liability of a house purchase? Many people will, understandably, still want to wait and see how the economic situation develops over the next six months. After all, the ghosts of 2008 still loom large in the public consciousness. 

None of this is to denigrate a much-needed boost for the housing market, on balance, the reduction is a good thing. However, it’s clear that if the sector is to continue its surprisingly positive trajectory, we need more. Much more. 

Is the Housing Market Really ‘Back’?

It’s been over a month since the Secretary of State for Communities and Local Government, Robert Jenrick, officially re-opened the English property market by lifting restrictions on estate agents and the buying and moving process. 

It was the announcement we’d all been waiting for and the industry breathed a collective sigh of relief at the end of the seven-week freeze. Perhaps things were finally returning to some semblance of normality.

But where are we nearly 6 weeks later? Is the housing market really ‘back’ in any meaningful sense of the word? And what can we expect for the rest of 2020 and beyond?

The Rebound

As of early June, the property market appears to have simply picked up where it left off pre-pandemic. Figures released by TwentyCi group reveal that the exchanges are being recorded at 68% of the same period in 2019, not bad given its two-month hiatus. Meanwhile, the market as a whole is operating at around 75% of the norms we saw throughout 2019.  

And this sunny outlook is being replicated elsewhere too. The Yomdel Property Sentiment Tracker is claiming that demand from vendors and landlords has risen to all-time highs. It’s results for the week ending 7th June show new enquiries from vendors seeking valuations skyrocketing. 

The number of vendors seeking a valuation rose 34% to hit 85% above pre-coronavirus levels. It appears that having put moving plans on hold, people are swarming onto estate agents platforms in a bid to get things moving again and into a new home before the summer is over. 

The Future 

So if the present state of the property market looks hopeful, what of the future? Well, it’s ultimately pretty mixed. Although, nothing like as bad as might have been expected after the last few months.

National estate agency, Savills, produces an annual five-year prediction for the housing market and has revised it’s November 2019 edition in light of the coronavirus pandemic. This new version makes for very interesting reading.

The property giant expects UK house prices to dip slightly throughout the rest of the year, dropping by 7.5% by the end of 2020. However, perhaps more importantly, Savills is standing by its original prediction of a 15.1% growth across the country by 2024. After the -7.5% fall this year, the data predicts a bounce-back of 5% for 202, followed by house prices rising by 8% in 2022, before returning to a steady 5% and 4.5% for the following two years.

Savills puts this bullishness down to factors such as better mortgage affordability and a ‘backlog effect’ of pent-up demand for UK housing. It also expects the market to closely shadow UK GDP, which is expected to fall during 2020 and bounce back in 2021. 

However, all this good news should come with a side of caution. There are still some major challenges ahead. 

Firstly, payment holidays are still in place for as many as one in seven mortgages. It remains to be seen how smoothly these will transition back to normal payments once things stabilise, particularly given we’re likely to see a tough employment market for the rest of 2020 and beyond. 

There’s also the first-time buyer elephant in the room. Demand for first-time property far outstripped demand pre-coronavirus, and this has only been made worse by months of downtime. Many lenders are withdrawing from the 90% LTV market, making it even more difficult for new buyers to get onto the ladder. Indeed, only 50% of mortgage products available pre-COVID are still on offer. 

On top of this, we still aren’t building enough new houses. The new-build market, which was already struggling to meet the number of properties required, has been set back further by a nearly two-month pause. It’s worth noting, however churlish it might sound, that all the demand in the world isn’t much use without a steady supply of new homes. 

Finally, it’s important to note that we just don’t know what comes next. The rest of this year could see the UK economy rally and return to the growth we saw pre-COVID, or it could be hit by a hard Brexit (yes, that again) and a debt crisis. As things begin to return to something like normality, let’s all pray it’s the former. 

What Easing of Lockdown Means for Conveyancing?

We’ve entered a new stage in coronavirus crisis. Some call it the easing of lockdown, others (mainly just those in Whitehall) call it ‘the second phase’. Whichever you favour, with the UK government announcing a partial easing of lockdown on measures on Sunday, it’s clear we’ve started, albeit very cautiously, down the long road back to something resembling normality. 

As the government advises some elements of the economy, including, crucially construction workers, to return to work where possible, where does this leave the conveyancing sector? Of course, we’re a long way from where we were in late 2019, or even early 2020, but where do we currently stand. 

Supply Chains

The part of Sunday’s announcement which will have provided most cheer for the property sector is the advice for construction workers to return to work where possible. At the start of the lockdown period, many had feared the supply of new build properties could be hit for years to come.

While it’s true that most construction sites have been closed since late March, as things currently stand, disruption may be much less than initially feared. Some developers such as 

Taylor Wimpey, Persimmon and Redrow, plan to tentatively reopen this month, with extra safety measures in place. And, provided we don’t experience a ‘second wave’ forcing the resumption of lockdown measures, the supply of new houses could emerge from the crisis at only slightly lower levels than it went in. 

However, obvious concerns about how ‘under control’ COVID-19 really is aside, there’s something else worth mentioning. Building materials. Although, many construction manufacturers and suppliers have weathered coronavirus surprisingly well, disruption to supply chains could continue for some time yet. This is particularly true of those businesses dependent on imports from China and other international markets. 


What about prices? Well, that depends on who you listen to. Savills has predicted falls in London of between 5 and 10% for the rest of the year, (although it also expects a 15% rise over the next five years. It also says property searches on its website are up 16% in recent weeks, and now stand 7% higher than before the current crisis began, promising a relatively swift return to normality. 

The BoE, however, predicts a 16% fall for the rest of 2020, which would put us in 2008 territory. Yet some commentators, most notably two analysts on CNBC, suggest that UK house prices will only fall ‘modestly’ in the next few months. 

The truth is we just don’t know. If the lockdown is extended into the summer things will begin to look very different and the industry will be forced to re-forecast. But, equally, we could also be looking at something approaching normality by the end of the summer. In such a changeable environment, coming up with any concrete predictions is tough and a little unwise. 

Transaction Numbers

Lastly, transactions numbers. Rather predictably, they continue to fall as lockdown eats into another month. Property portal Zoopla suggests around of 373,000 purchases are on hold due to COVID-19, and estimates put the value of these transactions at £82 billion. On top of this, it also expects transactions numbers to be half what they were in 2019. 

Meanwhile, Knight Frank is predicting the number of home sales in 2020 will decline by £526,000, a drop of 38% on 2019.

While that makes for gloomy reading, it’s important to stress that there are also a few causes for optimism. Firstly, because at some point, be it in late 2020 or early 2021 things will start moving again. When they do, conveyancers everywhere will have a backlog of stalled transactions to work through, as well as all those potential buyers who put it off due to COVID-19 uncertainty. 

Second, the new build market could soon be open for business again. Many estate agents have begun offering virtual tours to buyers to get around social distancing rules. What’s more, as we mentioned earlier, the construction industry is clunking back into gear, promising at least some supply of new homes. 

And, finally, discussions have begun about what we can do to get things moving again even if social distancing rules remain in place for the rest of the summer. The conveyancing industry has innovated in the past to deal with challenges, so perhaps it’s time we did so again. The new normal might not look much like the housing market we all recognise, but maybe this presents us with an opportunity to do things in a greener, leaner and more efficient way? 

What will the Conveyancing Industry Look Like Post-coronavirus?

If your COVID-19 experience has been anything like ours, you’ll have spent the last few weeks self-isolating and trying to complete what work you can – easier said than done when many land charges departments are closed and most transactions have stalled. So it’s the perfect time to take stock and think about what the future of conveyancing might look like.

In the short term, how long are the UK’s partial lockdown and the current restrictions on the property industry likely to last? And, in the longer term, how will the industry adapt to what could be the worst recession in a century and a world in which remote working looks set to become the norm?

The Short-term

First, let’s look at the short term.

The obvious place to start is the lockdown and when it’s likely to end. But, before we go any further, we need to add a caveat. The COVID-19 crisis is a live event and continues to change hour by hour, confounding even the world’s top scientists, so anything we say could be out of date within a few hours or days.

Nevertheless, there will no doubt be some in the UK looking hopefully towards Denmark and Austria who have both announced a cautious easing of restrictions beginning in the week after Easter. Could we soon see something similar in the UK?

Well, it depends where you look. The scientific consensus seems to be that social restrictions will stay in place for at least four weeks following the virus’s peak in the UK. Some, such as Dr Jenny Harries, Deputy Chief Medical Officer for England, think cases peaked over the Easter weekend and will now begin to fall if the public follows social-distancing measures.

Meanwhile, Chief Scientific Advisor Sir Patrick Vallance has said deaths in the UK will continue to rise for a further fortnight after Easter. Some scientists have even suggested the peak could come as late as mid-June.

The problem is we just don’t know. The UK is woefully behind in its testing capabilities.
Although No.10 has repeatedly claimed it’s on course for its 100,000 tests per day target, the reality is that even now when tests are being scaled up, the actual number of tests carried out has never risen much above a fifth of that figure. Compare this to Germany, confirmed as carrying out around 50,000 tests per day since the beginning of the crisis (although it should be noted Britain isn’t alone in its poor testing performance, France and Spain also lag behind).

Nor is the UK at all comparable with Denmark or Austria. Both of these countries moved to adopt stringent social distancing measures such as shutting schools and businesses early in the crisis and, as a result, have confirmed cases in the low thousands at the time of writing. Locking down early and keeping social interactions to a minimum during the early stages of virus transmission has allowed both countries to come out of the containment phase earlier.

For the UK, it seems certain it’ll be at least another four to six weeks before we see any easing of social restrictions, with the most optimistic predictions placing an end to the current lockdown in mid-May. This means we’ll see virtually no new transactions for at least another month and slow movement on those still outstanding, as land charges departments, law firms, surveyors and estate agents remain unable to work or confined to what they can achieve from home.

So it’s perhaps no surprise UK house sales are expected to drop to their lowest level in 20 years. But while that might sound grim, it should be taken with a pinch of salt. Economic stasis means that the plan, or what seems to be the plan, to temporarily ‘freeze’ the economy by furloughing large sections of the workforce and suspending business is working.

The Long Term

What about the longer term?

Well, the first thing to note is that COVID-19 is likely to change the way we work forever. Many conveyancing businesses and local authorities will have been forced to embrace remote working. Those that have are likely to find employees questioning why they need to return to the office at all once the crisis is over.

At the same time, some of them are going to find that running a business remotely is not only possible but perhaps even preferable, to the current approach. If economic predictions are correct, then many businesses and local authorities are going to come out of this crisis in financial straits and looking to save costs. And, if you’ve spent much of the last quarter working remotely with few problems, the most logical OPEX cost to cut is office space. This will be particularly relevant to local land charges departments, who could face a fresh round of government-mandated austerity.

The outcome of this is a hypothetical future in which much of conveyancing is done remotely. We’ve already seen the beginnings of this with the Land Registry’s much-opposed takeover and centralisation of LLC1 data. But could we see a future where all local land charges data is supplied from an online, centralised source? Or perhaps land charges staff will work from home and retrieve the data needed via an online database?

Furthermore, do solicitors need to be in the office to process documentation? Do estate agents really need a high street base to work from? When you couple the fallout from COVID-19 with the problems presented by climate change and the fact the planet needs less of us to commute using cars, trains and buses, the answer is likely to be no.

It’s clear COVID-19 could be the catalyst for a change in the way our industry works, but what about its long-term health?

It’s obvious the industry faces a difficult year, things were beginning to look up with the housing market finally returning to pre-2008 levels, but we’re now potentially back at square one. How well conveyancing businesses deal with this will largely depend on two things: one, how well run or overleveraged and indebted they were pre-coronavirus, and two, what the government does to keep the industry afloat.

Schemes like providing 80% of wages to furloughed staff and the offer of business loans at competitive rates are welcome but the industry will need more. In particular, those firms in poor financial health going into the crisis – quite a few, given the slow recovery from the last crash – will need direct financial assistance rather than loans if we’re to keep thousands of jobs from disappearing.
However, it’s not all bad. We may see a slight decline in prices spurring those who were on the fence into the market, particularly the young. What’s more, there’s nothing like spending two months’ trapped indoors to help you decide you really do need a bigger home or more green space.
So the industry should rebound. However, the speed at which it happens and what it looks like is entirely dependent on whether the government succeeds in preventing a temporary shock turning into an economic tailspin.
Over to you, Mr Johnson.

How Is COVID-19 Affecting the Conveyancing World?

We live in uncertain times. With the number of confirmed COVID-19 cases rising by the hour, it’s becoming increasingly difficult to picture what the world will look like in a month, let alone in six months or a year.

Against such a confusing backdrop, making predictions about the housing market or our industry is tough. We just don’t know how tight coronavirus’ grip on our society will get. However, there are a few questions floating around the industry that we can try to answer.

Does the Homebuying Process Count as ‘Essential Work’?

It might seem like there’s an obvious answer to this question, but there’s still a lot of confusion surrounding it. We’ve all heard horror stories about estate agents being ‘forced’ to go to work and even disguising their appearance to fool the authorities by not wearing a suit or neglecting to shave. But the truth is, even the government hasn’t decided whether conveyancing is an essential process.

As of Friday 27th March, the government was still debating the matter. While most solicitors have stopped taking face-to-face meetings and surveyors are refusing to come out to properties, some areas of the industry are still working away. For example, construction workers have been told they can continue to work, provided they remain two metres apart at all times.

Of course, there’s an argument to be made that the conveyancing process is ‘key’. If you’re a homebuyer halfway through a transaction, with all the uncertainty that brings, then it’s going to feel pretty important to you. Similarly, anyone unfortunate enough to be on the hunt for a new rental property when the virus hit is going to need an estate agent, even with a moratorium on evictions in place. Should their needs be catered to?

The truth is, that while we wait on a definitive stance from the government, whether or not you go to work is down to individual businesses. Most people we’ve spoken to are opting to work from home or suspend business for the foreseeable future. And the governments’ recent announcement that letting agents and estate agents will not be required to pay any business rates until next year has only made it an easier decision. 

However, there will be some businesses that choose to stay open for as long as government advice remains cloudy and open to interpretation.

How Is It Affecting Transaction Numbers?

According to figures from Today’s Conveyancer, search volume has decreased by a third in the last fortnight as the number of active buyers continues to drop. The overall volume of searches on Wednesday 25th March was down 33.36% on two weeks previously.

So we’re seeing a very real slowdown. This is partly being encouraged by the government, which has issued a plea for stakeholders in the home buying and selling process to do all they can to delay home moves until restrictions to reduce the spread of the coronavirus are lifted. 

Secretary of State for Housing, Communities and Local Government, Robert Jenrick even went so far as to say even if the legal exchange has taken place, both parties should ‘amicably agree’ a new move-in date. And UK Finance confirmed that mortgage lenders will do everything they can to facilitate this, by extending mortgage agreements by up to three months until exchanges can take place.

Alongside this, we’ve seen moves from banks and building societies to withdraw mortgage products temporarily to focus efforts on their existing pipeline.

The good news in all this is that by shifting their focus to already existing transactions, lenders will at least keep some work moving through the industry. What’s more, with everyone focused on getting a few transactions over the line, perhaps we’ll see them processed faster than they would be ordinarily. 

The obvious downside is that we face a race against the virus. If everything outstanding is completed before COVI9-19 burns itself out, the industry may grind to a temporary halt. 

What about Land Charges?

This is a tricky one. Every local land charges department we’ve come across has sent staff home to work remotely in one form or another. Although some facets of local government are considered key, local land charges, justifiably, isn’t one of them.

Where things become a little murkier is what services local land charges will provide remotely. Most local land charges are currently unable to process official or personal search requests at the moment. This is, of course, down to the difficulty in accessing registers and documentation when staff are at home working with outdated equipment and systems.

However, some councils are providing assistance for outstanding or urgent searches, while others have effectively closed for the duration of the crisis. So whether you’re able to get urgent local authority searches processed will largely depend on the council you’re dealing with. In some cases, you may even get them back faster than you would normally. 

So What Can Conveyancers Do? 

Given the seemingly contradictory advice coming down from the government, you could be forgiven for wondering what conveyancers can and can’t do. So here goes…

While strongly discouraged, moves are still permitted to take place ‘where the move can be done safely’ with all work adhering to guidelines such as ‘maintaining a 2-metre distance from others.’ It’s also important to note that, while it’s been underreported, the police have been granted exemptions to waive new enforcement powers concerning breaches of the new rules on social distancing, one of which is for ‘urgent moves’.

On top of this, conveyancers have been asked to prioritise the following:

  • Supporting the full sales process for unoccupied properties and advising clients that they will be able to move if all advice is followed regarding social distancing
  • Encouraging transactions due to complete in the days ahead to delay the process while the stay-at-home period continues
  • Advising clients who are ready to move not to exchange contracts on an occupied property unless they have made explicit provision for the risks
  • Prioritising support to anyone with symptoms, self-isolating or shielding from the virus and those they are in the chain with, and do all they can to help a new date to be agreed in these circumstances

We face an uncertain few months. Lenders are suggesting that finance will be limited until restrictions are lifted and resources ploughed into mortgage break enquiries rather than new transactions. Meanwhile, the restrictions placed on surveyors and the closure of land charges makes the basic process of home buying and selling tricky. 

Yet, for all the uncertainty, perhaps there are some positives. The industry will likely continue working in some limited way for the next few months as it works through outstanding or urgent cases. And it offers us all a chance to step back, reset, and consider how we do things. It’s also possible that policy like mortgage payment deferrals may win back some much needed public trust for lenders.

Of course, times are tough, and we may have to endure a difficult summer of economic uncertainty. But as we’ve said before, the housing market is incredibly resilient. Maybe, just maybe this is simply another hurdle for it to overcome. We live in hope. 

Finally, Some Good News About the UK Housing Market?

Good news is a rare commodity at the moment. We’re potentially facing a global pandemic in the form of coronavirus. The global economic outlook looks gloomier than it has done since the 2008 crisis – FTSE 100 plunged by 3.5% in early March. And, to cap it all off, the prospect of a no-deal Brexit continues to cast a long shadow over the UK economy.

But there’s one area of economic life where things look a little brighter. The UK housing market is continuing on the upward trajectory we saw at the end of 2019.

House Prices

First up, the ‘Boris bounce’. According to figures released by Nationwide, UK house prices grew at their fastest rate in over a year at the start of 2020. The housing market posted a 1.9% annual rise in January, bettering the buoyancy we saw in December by 0.5%. This came after 12 months of sub-one-per cent growth following November 2018’s 1.4% spike.

The good news doesn’t end there. The average price of a home climbed 2.3% year on year to £216,092 in February, the strongest growth rate in 18 months.

This comes as something of a surprise. Overall economic growth came grinding to a halt in late 2019 and, usually, where the economy leads the housing market follows.

So what’s happening?

Some commentators have dubbed this upturn in fortunes ‘the Boris bounce’. The theory goes that Boris Johnson’s resounding election victory has ‘removed a spanner from the works’, creating greater buyer confidence in the market. And, it’s true, demand does appear to have rebounded after nearly two years’ of low buyer confidence.

However, buyer sentiment isn’t the only thing driving the rise. Healthy labour market conditions and low borrowing costs are also playing their part in offsetting general economic uncertainty.

Prospective Buyers

We’ve spoken about rising demand, but what about the people driving it?

Well, there’s been positive developments in this area too. January 2020 saw a yearly increase of 29% in the number of potential buyers registered per estate agency branch according to Today’s Conveyancer. The figure rose from 297 per branch in January 2019 to 382 in 2020. 

What’s more, the January figure represents a 22% increase on December 2019, which posted 313 potential buyers per branch.
This surge in demand is closely linked to the rise in prices. Although buyer interest is recovering, we’re still woefully short of places for them to live. December’s increase in available housing stock was followed by a drop in January from 41 to 38 available properties per branch, and with less available houses come higher prices.

The lack of housing is particularly important to first-time buyers, who ‘currently make up 29% of all transactions. New-build transactions are on the rise – figures climbed 3% between in period January 2019-20 – but, simply put, we still need more houses. The BBC’s Housing Briefing estimates that we have built 1.2 million fewer homes than we should have and the need is only going to become more acute with growing demand. 

This isn’t meant to put a dampener on what’s very good news but, if this sudden surge is to be more than a blip, we need a concerted effort to increase housing stock.

Mortgage Approvals 

The last flower in our bouquet of spring joy comes in the form of mortgage approvals. January 2020 brought with it pre-referendum highs for mortgage approvals, hinting that maybe, just maybe, lenders are finally be getting over their Brexit-induced caution.

The 70,900 mortgage approvals for house purchases represents a 4.4 per cent increase on December 2019 and the highest rates since February 2016. The figures, released by the Bank of England, come off the back of an already promising December. In addition, the annual growth rate for mortgage borrowing continues to rise, seeing a 3.4% growth in the last year.

The BoE also reports that January’s figures are statistically higher than average, with the current numbers ‘‘taking the series above the very narrow range seen over past few years.”

Will It Last?

So, is it all sunlit uplands from here on out for the housing market?

It’s probably best to exercise caution. As Nationwide’s chief economist, Robert Gardner put it to The Guardian, “there are still significant uncertainties that threaten to exert a drag on the economy in the coming quarters.”

Chief among these ‘uncertainties’ is, of course, how Coronavirus develops. It’s already playing havoc with the global economy and few people want to move in the midst of a national crisis. But Brexit and whatever happens in the spring budget are also factors to consider. Likewise, the shortage of housing may cause a contraction if steps aren’t taken to make more homes available.

On the other hand, Nationwide expects the UK economy to continue growing at a modest pace, with house prices staying fairly flat. If this forecast proves correct, conveyancers could see their fortunes improve even further. 

Is Elderly Accommodation the UK’s Hidden Housing Crisis?

We live in an ageing society. Data released by the ONS in 2019 reveals that the number of over 85s is set to double in the next 25 years. While the UK population is set to rise by just under 5% (from 66.4 to around 69.4 million) in the next decade, the number of elderly people over 85 is set to double from 1.5 to nearly 3 million.

This has potentially devastating consequences for the NHS and a social care system already bursting at the seams. But you could be forgiven for wondering what it has to do with the housing market or conveyancing. Aren’t the elderly the least likely people to buy a new home? Or put up with the stress of moving?

It’s true. If we look at census data there is a direct correlation between your age and how likely you are to move. And from your late twenties onwards, the younger you are, the more likely you’ll move home.

So what’s the problem? 

A Lack of Suitable Homes

We’re forever hearing Britain doesn’t have enough homes. Too few council properties. Not enough affordable housing to help younger buyers get on the ladder. And let’s not even get started on London.

The conversation around our chronic lack of housing is forever bubbling away in the background. Government after government has promised a fix to the housing crisis with little tangible progress. And the truth is most of us have learned to treat it with a kind of weary resignation. 

But there’s one element of the housing crisis that doesn’t generate the same level of coverage. You’ll rarely hear it discussed on panel shows. Nor is it a regular feature in political discourse. 

We’re, of course, talking about the lack of suitable accommodation for the elderly. In a recent report, the Royal Institute of British Architects (RIBA) said that the failure to plan for a quarter of the country’s population being over 60 in five years’ time is likely to put ‘enormous strain’ on public finances. This is due to what it calls  ‘the health and social care costs of inappropriate housing.’

This was followed by an even scarier forecast from The Local Government Association. According to its research, the number over 65s whose day to day activities are ‘significantly limited’ will also rise by 30% in the next five years. In real terms, this means an extra 3 million people in need of specialist accommodation and provisions. 

To be clear, this isn’t just about care homes. But it is worth noting the parlous state of our care homes. Lack of investment in the sector has left many working with outdated facilities – 72% are over 20 years old. And many are struggling to survive at all. The last figures on the subject revealed that care home insolvencies increased by 83% in 2017.

Limited resources in specialist care make it increasingly likely that the residential property sector is going to have to pick up some of the slack. More and more elderly people are left with little choice but to receive care in their home, something our existing housing stock is ill-prepared for. 

What’s more, we’re simply not building new homes with the elderly in mind. When was the last time you saw a newbuild intended for elderly inhabitants? Or with any concession to age for that matter?

It’s not overstating it to say we’re facing a crisis. If large swathes of the population live in homes unsuitable for elderly care, where will they go? We’ve already covered the disastrous state of residential care facilities. Our hospitals are full. Our social care system is at breaking point. 

We need homes and we need them quickly.

What can be done?

Obviously, we need state investment. We need more socially-constructed housing for elderly people. We need more residential homes. And we need more specialist carers, provided with the resources they need. 

However, so far at least, the appetite to deal with the issue doesn’t seem to be there. None of the major political parties appears to feel any great urgency about building homes for people above pension age. Although, credit where it’s due, Labour did promise to ‘fund free personal care for older people’ in it’s 2019 manifesto.

But we can’t leave it all to the state. The issue is only growing and it needs to be battled on every front possible.

It’s here that the property sector, particularly developers, has a role to play. It’s obvious we need to build more purpose-built residential property for the elderly. Developers could provide it. Why not include a certain quota of housing suitable for elderly occupants in every development, much like the current obligation to build ‘affordable homes?

In the same vein, why not build houses that can be easily adapted to incorporate stairlifts or disabled bathrooms?

Of course, we’re not suggesting that this should be solely the responsibility of private developers, but they could reduce some of the strain on a creaking state. What’s more, it’s a real opportunity for developers to work in a new and growing market, all while doing some good. 

Whatever happens, the time when the issue can be put off is fast receding. The crisis is coming, how will the property sector react?

Is Freehold the Next Great Scandal?

Not so long ago buying a freehold property was the safest of safe investments. Unlike leaseholds, freeholds weren’t traditionally subject to ground rents. Nor could buyers expect to pay service charges, excessive permission fees or the small fortune required to extend a lease.

In short, buying a freehold meant your own little slice of Britain, with which you could do more or less as you liked. 

Not anymore. According to a raft of recent media coverage, purchasers of new-build freeholds are becoming subject to the same punitive conditions as leaseholders, as some developers sneak restrictive covenants into ownership terms. 

As many as 1 million UK freeholders are shackled to contracts insisting the owner is liable to pay services and permissions charges. And this figure is only growing. Since 2015, 178,768 rentcharges have been registered with the Land Registry, with 29,968 of them logged in 2019.

Most of these covenants are obligations to pay for the upkeep of shared roads, green spaces, and communal areas. However, there have been instances of freeholders being charged for the privilege of being ‘permitted’ to build a garden shed or make improvements to their own property.

Worse still, there have even been a few cases where freeholders have discovered an obligation to pay an administration fee for selling their home.

The problem is not just that these fees are often arbitrary and unreasonable, they’re also potentially crippling. The fees for estate services can run to thousands of pounds and make it incredibly difficult to sell the property, leaving buyers trapped in essentially worthless homes.

In much the same way as Chancel repair liability, freehold charges have the potential to inflict misery and debt on thousands of people. The only difference is that one is a hangover from the reformation and the other has recently been concocted by unscrupulous developers.

How has this happened?

Christened ‘the new PPI’ by some MPs, the move towards inserting service and permission charges into freehold contracts is actually an unwanted consequence of attempts to get tough on leasehold charges. The last few years have seen a tightening of the rules around leasehold and attempts to protect leaseholders from exploitative landlords.

Obviously, this is welcome; leasehold has needed wholesale reform for decades. However, an unintended consequence is that in denying developers the extra source of revenue rentcharges provide, it’s pushed some developers to start getting creative with freehold law to compensate. 

Estate rentcharges and variable rentcharges are permissible under the Rentcharges Act 1977. So for now, at least, it’s completely legal for developers to subsidise the money lost to leasehold abolition by creating freehold properties with rentcharges attached – even if this does make a mockery of the whole concept of freehold property. 

Of course, this has no long-term future. Were this extractive and, frankly, crooked trend to continue, new-build freeholds would cease to be a worthwhile investment for anyone and we’d quickly see demand for them dry-up, plunging the country even deeper into its affordable homes crisis.

With all that said, action to stop developers skimming more off the top of freehold property sales has been moving at a glacial pace. A cross-party group of 30 MPs had drawn up a bill to tackle the issue, with proposals to force developers to build estates on areas that could be adopted by local authorities and the regulation of service charges. But this bill was stalled by the prorogation of parliament earlier this year and has shown no sign of returning. 

Alongside the aborted bill, there is also a House of Commons paper briefing from August 2019 which sets out plans to reform freehold within a year but, like the cross-party bill, it’s difficult to see when this will happen amid the chaos of Brexit. 

With the regulatory route closed, at least temporarily, is there any way around the issue? Well, some within the industry have suggested that homebuyers need to learn to see benefitting from shared spaces and facilities as an ongoing expense attached to a property, and budget accordingly.

While this looks like a commendable idea on the face of it – after all, we really could do with a little more community spirit in our society – you only need dig a little deeper to hit problems. Fostering a more public-spirited approach to property is a noble aim, however, the money extracted in rentcharges doesn’t usually go into a community fund and saved for a rainy day or the next time the communal garden needs sprucing up. Instead, it goes straight into the pockets of developers who do little or nothing to justify that money.

And this is before you even consider things like permission fees for selling the property. It’s hard to see how adding an extra few thousand pounds onto the cost of moving home can ever be a public good.

So it’s clear the answer doesn’t lie with changing the perspectives of buyers. In the short term, conveyancers need to be making clear to buyers their obligations and the likely costs involved in the future should they move into a new-build property. 

In the medium-to-long-term, we need government action and firmer regulation to stop what amounts to penalising first-time buyers.

Although labelling it ‘the new PPI’ might be pushing it a little, there’s no doubt rentcharges strain the credibility of freehold property. Buying a property outright, only to discover that many of things homeowners usually take for granted come with extra fees is not what freehold was intended for. We can only hope that with the self-styled ‘party of property’ in power, things may be about to change. 

What Can Conveyancers Expect in 2020?

It’s that time of year. The days grow short, a new decade creeps ever closer, and everything you read online seems to be a series of lists looking forward to the year ahead or back to the year just passed.

In that noble tradition, we’ve put together a few predictions for what you can expect from 2020.

  1. An End to Uncertainty

With Boris Johnson’s resounding victory in the December election, the deadlock is broken. Whatever you think of the result, it’s now become considerably easier to predict where the UK will be in 2 months’ time. Whether it’s through a no-deal exit or Boris Johnson’s flimsily- constructed package, we will be leaving the EU on the 31st January 2020.

Of course, the economic impact of this remains difficult to predict but barring a full-blown recession it may at least begin to rebuild confidence among homebuyers. As we’ve covered throughout the year, the spectre of Brexit and a potential election have, at least partially, contributed to a slow 6 months with many people reluctant to move.

With one of those events now a virtual certainty and the other in the past, we should begin to see confidence in the market pick up again. Although, it’s worth noting things might remain slow throughout January as potential movers wait to see how Brexit falls.

  1. 5AMLD

We covered The Fifth Anti-Money Laundering Directive (5AMLD) in a recent blog, so for a more in-depth piece on the subject please head over here. However, with little time left until the 10th January adoption date, it’s worth recapping on what it is.

The 5AMLD is a series of tweaks to the broader fourth directive issued back in 2017, covering digital currency, transactions from high-risk countries, and access to payment account registers among other things. It represents a continuation of the trend towards legislators prioritising anti-money laundering efforts, so for conveyancers outside of the big London firms, there isn’t much new in it.

That said, it does up the stakes for failing to meet your AML obligations, meaning it’s more important than ever to make sure every transaction is accompanied by an AML check throughout the year ahead.

  1. Stamp Duty Overhaul

For the moment, this one remains a bit of a hypothetical. Prior to becoming leader of the Conservative Party, one of Boris Johnson’s key promises was to overhaul the existing stamp duty land tax (SDLT). Johnson pledged to redraw the current SDLT threshold by scrapping the tax on properties worth less than £500,000.

However, since becoming leader Johnson has been decidedly lukewarm and noncommittal on the subject, but could we see it revived once Brexit is resolved? It would certainly work as a gimme to many of the voters that brought the Tories power in the recent election.

One group certain to be affected by a Tory majority is foreign investors. The party’s manifesto included a commitment to raise the SDLT surcharge on foreign investors by 3%, following the 1% increase made last year. The manifesto pledge claims this will add £120 million to government coffers over 5 the years of Johnson’s term.

  1. A Bamboo Invasion

No, you’ve haven’t read that wrong; we’re really going to talk about bamboo.

Everybody’s aware of the damage Japanese knotweed can do to the structure of a building. In fact, one of the most high-profile cases this year came in the spring when a homeowner was awarded £50k after a chartered surveyor failed to spot Japanese knotweed prior to the purchase of a £1.2 million London flat.

But there’s a new threat on the horizon. Bamboo. Like Japanese knotweed, Bamboo is also highly invasive and can wreak the same havoc on a property if left unchecked. Some species of ‘running’ bamboo can grow up to 30ft below the ground, causing all manner of subsidence problems.

Unlike its Japanese cousin, it isn’t yet illegal to cause or allow bamboo plants to spread in the wild. Yet, it can pose exactly the same risks to property as knotweed and is increasingly becoming the source of bitter boundary disputes between neighbours. It might not have the same bad reputation as knotweed, but expect to hear a lot more about Pandas’ favourite snack in the next year.

  1. A New Year Surge

Although some industry figures, ourselves included, are predicting a slow start to 2020 as buyers wait to see what happens on the 31st January, others are predicting a post-Christmas surge.

According to research from Rightmove, five of the six busiest days of 2019 were in January and February. 13th January, 21st January, 27th January, 2nd February, and the 12th February were some of the busiest days last year and some in the industry are expecting more of the same.
These figures should probably be taken with a healthy pinch of salt, the political and economic landscape in January 2020 should be very different from this time last year. It seems unlikely the pending exit from the EU won’t cause a temporary slowdown in house sales as buyers act with caution but, admittedly, it’s a nice thought.

  1. Housing at the Top of the Political Agenda

We are in the middle of a housing crisis. Brexit may have temporarily obscured it but, after the NHS, housing remains one of the issues most important to the electorate. Perhaps as a result, the Tory manifesto contained several key pledges on housing, including:

  • A promise to build 1 million new homes by 2025 (although, the eagle-eyed among you may have spotted that this equates to 200,000 per year, a decrease on the current target of 300,000)
  • A new market in long-term fixed-rate mortgages, requiring only 5% deposits, to try and help more first-time buyers onto the ladder
  • A new ‘First Home’ scheme, allowing first-time buyers to purchase at a 30% discount

Whether these will be enough to make anything more than a dent in the UK’s housing problem remains to be seen. Nevertheless, as the distraction of Brexit finally subsides expect housing to come roaring back to the top of the political agenda.

The 5AMLD: What Is It and What Does it Mean for Conveyancers?

The 10th of January 2020 will see the latest attempt by the UK government to tackle money laundering come into force. But what is the 5AMLD? How does it differ from the Money Laundering Regulations 2017? And, most importantly, what does it mean for conveyancers?

What is the 5AMLD? 

The Fifth Anti-Money Laundering Directive (or 5AMLD if you like acronyms) is an EU directive enacted in early 2018. It’s being adopted by the UK now because the January 2020 deadline for transposition of the directive – the date it must be made part of UK law by in non-EU legalese – is fast approaching. 

It’s the latest attempt to combat money laundering, currently costing the UK £100 billion a year according to National Crime Agency figures, and will supersede the Money Laundering Regulations 2017.

How Does it Differ from the Previous Regulations?

It’s important to note that the 5AMLD is nowhere near as extensive as its predecessor the Fourth Anti-Money Laundering Directive (transposed as the Money Laundering Regulations 2017 in the UK). The previous directive completely transformed the way business approach money laundering, bringing in changes such as the risk-based approach and removing automatic exemptions from due diligence.   

Instead, the 5AMLD is more about subtle tweaks to the existing structure of the last directive. It adds some additional provisions that weren’t in the original scope of the 4AMLD. These changes mostly focus on enhancing access to information and increasing the transparency of beneficial ownership information and trusts. The changes include:

  • Stricter regulation of payments in digital currencies such as Bitcoin and pre-paid cards to prevent terrorist financing
  • Improved safeguards for financial transactions to and from countries the EU deems as ‘high-risk’
  • Better access to centralised national bank and payment account registers or central data retrieval systems in all member states
  • Public access to the Registers of Beneficial Ownership introduced by the Fourth Directive
  • Greater transparency obligations for trusts, which will be required to meet the beneficial ownership requirements. This is alongside potential changes to the threshold for identifying beneficial ownership in high-risk cases 

What Does it Mean for Conveyancers? 
What does all this mean for firms operating in the property sector? Well, in simple terms, these changes shouldn’t have a dramatic impact on most firms in the short-to-medium-term. Although the directive includes firms acting as letting agents for the first time in high-value transactions with a monthly rent of €10,000 or more, this is unlikely to affect many firms outside of London.

Greater due diligence is required for any firm processing transactions in cryptocurrencies and it’s definitely worth conducting a risk assessment to establish whether your firm is exposed at all and training all staff accordingly.

For those dealing with corporate clients, there is a requirement that details of proof of beneficial ownership should be collected and checked. And, a new obligation to identify senior managing officials if corporate beneficial owners can’t be identified. It also looks as though this proof will increasingly need to be electronic.

The bottom line is that conveyancers should be conducting thorough anti-money laundering checks with every transaction. And, in most cases, this can be achieved by purchasing an AML check from Veriphy or a similar provider. One thing’s for sure, with potential fines of up to €5 million or 10% of annual turnover for non-compliance, it’s never been more important for conveyancers to get serious about anti-money laundering measures.  


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