How badly will coronavirus hit UK house prices in 2020? Well, that is a question that not even the very best property experts can answer. To forecast property prices during a global pandemic is almost impossible as we still have no concrete answers surrounding a vaccine, nor do we know how the mortgage market is actually coping at this time.
What we do know is that it may have been bad economic news for stocks, but the property market has been booming over the past few months. The UK’s property market had a ‘mini-boom’ in July. It showed no signs of slowing down in August with the highest number of monthly sales in more than ten years, with a total record value of over £37 billion according to Rightmove’s current index.
This is great news as there is typically a seasonal decrease in the UK housing market, but it’s clear people in Britain have turned to buying homes and investing in property to fill the void in summer vacations.
Investing in assets in markets that have been known to flourish during a recession, such as the housing market, is an ideal way to build your investment portfolio, whilst taking advantage of the low-interest rates and discounts, as well as reaping the rewards on rental payments and long-term capital appreciation.
Demand for Rental Properties
As unemployment levels continue to rise, factors such as affordability will be taken into account when buyers are looking for a home. For those who are concerned about their finances are now looking to rent a property instead of becoming a homeowner. However, this is great news for savvy investors, who will look to capitalise and secure buy to let investments to meet the rise in tenant demand.
With the need for more rental properties, especially in the north of England, landlords can enjoy up to 10% yields on their investments. Director of MT Finances, Timer Aboody noted that the housing market outside of the UK’s capital has been busy with professionals looking for cheaper commuter belt homes, big enough for remote working and sometimes with a green space for children.
Multiple cities throughout the UK provide buy to let hotspots. Although property investment is at an all-time high right now, choosing the right location is still crucial to maintaining consistent rental payments and for the overall value to increase in years to come. Areas in the north are thriving at the moment, and there are some great deals to be had with promising returns for future investors. Award-winning UK property investment company RWinvest notes Liverpool to be one of the best places to look to moving forward.
Stamp Duty Holiday Encourages Buyers
Another reason for Britain’s post-lockdown ‘mini-boom’ could be caused by the support from the government that unveiled stamp duty cuts for residential properties, purchased from 8 July 2020 up until 31 March next year. For anyone buying a property during this time, they will only pay stamp duty land tax (SDLT) on the amount they pay for the property above £500,000 and will apply to both first-time buyers and those who have invested in property before.
Chancellor Rishi Sunak stated that the stamp duty cut would amplify the buyer surge and push asking prices to a record high, which is exactly what happened. As Covid-19 caused a significant change in life as we know it, many people have been questioning whether they should be selling or buying their houses. Still, this tax relief has given people the push in the right direction, in terms of benefitting the property market.
This new stamp duty holiday only applies to those in England and Northern Ireland, which provides the perfect opportunity to capitalize on some of the highest yields in the country.
Landlords and second-time buyers are also eligible for the tax cut but will still have to pay the additional 3% of stamp duty they were charged under previous rules.
Low-interest rates and discounts
It’s no secret that property investment companies have been offering some amazing deals to buyers at the moment, and smart investors are taking advantage of the heavily discounted prices and assured rental yields to widen their portfolio. If you’ve been pondering over the idea of investing in property for a while, it might be worth contacting your local company to check what exclusive discounts they have to offer.
Anytime there is a financial crisis, property investment companies will look to help the housing market get back on track by offering a lower property price or lower deposit as an incentive for people to buy. As you could spend a lot less on a high-quality asset, be mindful that patience may be required, as some lenders will limit their product ranges due to the delays in processing mortgages following the pent up demand.
