Despite the UK being in recession and the rise in unemployment, the housing market “is performing its strongest for five years” real estate site Zoopla tells Bustle. The rebound in the housing market is “pointing to a wider rebound in the economy” following lockdown, but for those wanting to buy and move the uncertainty can be daunting, especially as some experts are sounding caution over the current housing market boom. So here are five things you should know if you’re buying a house during the coronavirus pandemic.
1. What To Expect From Estate Agents
Depending on your local branch, most estate agents across the UK are open again but are following strict social distancing guidelines. Andrew Groocock, Regional Partner at London-based estate agents Knight Frank tells Bustle that their teams are “adhering to all social distancing guidelines, which means you should be prepared for distancing during viewings, and wearing masks and gloves throughout.”
The government is advising buyers to prepare for delayed moves, as the Home Owners Alliance writes, especially if you or someone you’re moving with has tested positive for COVID-19. It’s also advised that you do the majority of property searching online, “and only physically viewing the properties you are serious about.” If you require a surveyor or a mortgage valuation, there may be a delay due to a backlog of customers wanting to sell and/or buy.
2. Are Rising House Prices Good Or Bad?
The rise in house prices is a good thing if you’re selling a house, but not so great if you’re a first-time buyer as BBC News reports. An increase in prices means an increase in deposits, whether you’re planning on getting a mortgage or renting. Savings are also an issue, with “more than half of renters aged between 25 and 34” not having savings and “others have either had to cut or dip into savings during lockdown owing, in part, to lower outcomes.”
Banks aren’t offering as many mortgages either at the moment, the Guardian reports. The number of home loans “approved in Britain has fallen by 90%” since the start of the pandemic “to the lowest since at least the early 1990s, the Bank of England has said.”
Loan-to-value mortgages are less generous due to banks being more cautious with their lending, meaning first-time buyers may have to put down larger deposits in relation “to the value of the property you want to purchase”, as Money Supermarket writes.
3. Look Out For Hidden Costs
When buying a house, you need to consider the hidden costs that will most likely come into play. In a recent survey, real estate site Zoopla tells Bustle that 39% of Brits have been affected by hidden costs when they last moved home, and “30% of respondents stated these costs were more than £1,000.”
46% of respondents “wished they had been more vigorous with their research before purchasing”. Sites like Tesco Bank offer extensive explainers on potential hidden costs, from things like legal fees, survey costs, land registry fees, building insurance, and moving expenses to VAT, and the cost of setting up a phone/broadband line.
4. Manage Your Savings
Having enough saved for a deposit is essential, but having money left aside can help in the event of hidden fees and other issues that may arise. There are dozens of ways to start saving efficiently, including setting up a standing order “a couple days after payday to ensure that money is being siphoned off into a savings account or ISA every month,” as home buying company WeBuyAnyHome suggests on their site.
They also suggest considering a low entry point into the housing market for first-time buyers. So instead of aiming for the dream of a “three-bedroom detached family home” with the benefits of off-street parking and a garden, “scaling down your expectations on your first home and opting for a lower entry point into the market is a wise option for most.”
It's also worth reviewing the essential things you need out of a new home, as Gráinne Gilmore, Head of Research at Zoopla tells Bustle, which may influence your budget. "A strong rebound in demand among home movers since lockdown is one factor underpinning pricing in the housing market.
"However, this is coupled with a once-in-a-lifetime reassessment of housing needs among some buyers, who have used lockdown to review how, and where, they live," she says. "This is reflected in our data which shows that a desire for more space means houses with three or more bedrooms are currently the fastest-selling homes on the market."
5. The Temporary Stamp Duty Holiday
Stamp Duty is a land tax you must pay if you buy a house over a specific price in England and Ireland. Due to the pandemic, there is currently a temporary Stamp Duty holiday until March 31, 2021, meaning that you will not have to pay this tax of properties costing “up to £500,000”, which applies “whether you’re a first-time buyer or have previously owned a property.”
Knight Frank’s Andrew Groocock tells Bustle that this temporary holiday “has stimulated the whole market, with the number of viewings and offers accepted dramatically above average.” Not having to pay Stamp Duty “enables buyers to save up to £15,000, which can then be used to top up their deposits, enabling them to borrow more and potentially afford a larger property than they initially thought they could.”
This sort of saving power can enable you to move up the property ladder, he says, meaning “that perhaps you can now afford a two-bedroom flat instead of a one-bedroom, or buy in a more desirable area.”
“You can then stay in that property for 5-8 years before selling,” Groocock adds, “instead of the usual 3-4 meaning that’s one less move you’ll have to do in your lifetime.”