Despite concerns for the UK property market due to the ongoing coronavirus pandemic, Brexit, and resulting economic fallout, 2021 could still prove to be a good year to invest in British property. Here’s what you should know about the UK property market in 2021.
The stamp duty holiday deadline is a game changer
While the last half of 2020 saw an unexpected boom in sales, the end of the temporary stamp duty holiday in March (and a spike in unemployment with the furlough scheme set to end in April) could cause the market to slow to a more normal rate following a substantial year of growth. That said, there are ongoing discussions that the temporary holiday might be extended, while some are even calling for it to be permanent.
By temporarily scrapping the tax on property purchases with a value of less than £500,000 (saving home buyers up to £15,000) since July last year, Chancellor Rishi Sunak has successfully stimulated the housing market, boosting consumer confidence in buying and investing in property.
As of January 31st 130,000 people had signed an official petition for the stamp duty holiday to be extended by six months until September. As a result, the government held a debate on the issue in the House of Commons on Monday, 1 February, and an announcement on a potential extension is expected soon.
According to property website Rightmove, around 100,000 buyers are currently in the process of buying property and won’t meet the current 31st March deadline, which means they will have to face a hefty tax bill unless the date moves. However, if the holiday is extended, 2021 might prove to be the perfect year to buy.
Lifestyle changes will influence house sales
Over the course of 2020 it became clear that the pandemic and subsequent UK lockdowns caused an increase in people moving to new homes for a number of reasons, including the desire for more space and gardens (dubbed the “race for space”), better commutes or seeking areas that were not desirable before the flexibility of the “work from home” era. Much of this new demand is focused on the South-East market and countryside areas like South Oxfordshire, Cornwall, Guildford and Tunbridge Wells among others.
According to the estate agency Savills, after years of underperforming, the country house market rose in value by an average of 5.5% in 2020, marking the strongest price performance for this sector since 2010.
It’s safe to assume that this trend will continue in 2021 as the pandemic continues on, and spots to look into as possible lucrative investments include Devon, Cornwall, Dorset and Norfolk among others.
The vaccine effect
Additionally, the ongoing roll-out of the Covid-19 vaccine is giving people more confidence that the market (along with everything else) will return to “normal” later in 2021. The vaccine programme promises not only to save lives but to prompt a return to normal, stabilising various sectors of the economy and enticing buyers back to the market.
With the future of the UK property market truly up in the air, it’s a daunting time to pursue your dream property and/ or investment. Contact Tailor my Property to enquire about our range of services, covering everything from tax services to your UK mortgage questions.