Stamp duty lowered, for most, to 1999 levels allows supply & demand to flow free and fast.
All change in the suburbs, whilst central Londoners just want to go back to the office.
Demand strong but changed, as pandemic produces more political promises.
Like lowering a dam in a river, reducing stamp duty to 1999 levels is allowing supply and demand to flow relatively free and fast. Alongside, lockdown has changed what buyers want. Will these trends outlive the end of the stamp duty holiday?
Main photo: Denbighshire £695,000 guide (Chester)
Front cover and below: North Devon £650,000 guide (Barnstaple)
Always upbeat, Tim Dansie of our Ipswich office talks with even greater enthusiasm than usual about the fluidity of the current market: “ the most extraordinary of my career ” he says. Tim points out that, following years with plenty of activity at the lower end, 2020 began with notable confidence at the top-end, “ but there was a real log-jam in the middle, where stamp duty really bites ”.
Between £500,000 and £1m, Tim explains, a high proportion of buyers and sellers are moving both locally and within that price bracket. They have plenty of equity but, often, not a great deal of cash. A £30,000 tax bill is a big disincentive, especially when not much is coming onto the market to tempt them. The position now, across much of the country, could hardly be more different. Demand built up during lockdown and released by the stamp duty holiday, has resulted in the sale of most fairly-priced houses already on the market. Seeing this, would-be sellers who had been waiting in the wings, sometimes for years, have entered the market, creating a flow of attractive properties, tempting others to trade up. This, in turn, has fueled activity at higher price levels, where the tax savings appear less significant. In Cheshire the typical selling price achieved by Jackson-Stops Alderley Edge tends to be well into seven figures, yet director Crispin Harris is quick to stress the importance of activity under £1 million – and of stamp duty: “
downsizing to houses just under it, so availability there is key and lower tax is definitely an incentive
for them. ” For buyers at, say, £2 million plus, stamp duty tends to be less of an issue but, even there, Crispin adds, “ Larger rural properties can often qualify for greatly reduced stamp duty under the mixed used rules, so lower tax often incentivises buyers at this level, too. ”
A greater appetite for rural houses with lots of land is one of the many effects of lockdown. Kent, for example, still has some surprisingly remote corners, from which commuting into London every day might be a little daunting. Cut that to two days a week, and the half hour drive to the express train station becomes much less of a hurdle. What other effects has lockdown had on demand? Two factors dominate: travel and working from home.
Top: Cheshire £12,500,000 guide (Alderley Edge)
Centre: Bedfordshire £5,000,000 guide (Woburn)
(Chelmsford)
runs until 31/3/21. For most, it cuts tax payable to levels set in 1999.
The
The ‘working from home’ factor is universal, from Teddington to Truro. Even those whose home is a two minute walk from work are having to ask ‘If we have another lockdown, how will I cope, living and working here?’. For country houses, ‘coping’ starts with good broadband and a quiet place in which to work. Noisy children, pets and dodgy connections interrupting video conferences are fast losing both their novelty value and the good natured acceptance that went with it. Employees, especially those voluntarily working from home, have to show that it works. After all, if the kids interrupt you even when colleagues are watching, what is going on for the rest of the time?
After a functioning office, comes living space and storage: if stuck at home for a month or more, is there enough of both? Few want the full ‘nuclear bunker’ option (one family looking in the West Country wanted freezer space for six months’ food) but even buyers of small cottages want to be able to self-isolate comfortably for at least a couple of weeks. Which brings us to the second home market. Amongst the buyers happy to move further afield, knowing they can work more from home, are those looking for a holiday home rather than a main residence. They still have to pay the extra 3% stamp duty which so dampened demand when introduced in 2016, but it’s now a lot easier to stomach, coming on top of zero (below £500,000). We thus expect to see more seaside cottages and ‘glamping’ fields such as five acres on the Norfolk coast currently offered by our Burnham Market office, as this market recovers a little. Whether, along with the mainstream upper market (half a million is still over double the UK average house price) it will continue its trajectory come 1 st April 2021, remains to be seen. In the meantime, greater market fluidity is good news for buyers and sellers alike.
Left: Surrey £1,125,000 guide (Dorking)
Below: Hampshire £1,725,000 guide (Winchester)
Bottom left: Cornwall £1,300,000 guide (Truro)
Increased demand has added to upward pressure on rents, but the package matters as much as the price, rewarding those able to be flexible.
Even in anticipation of lockdown, rural areas saw an influx of demand from city residents seeking country boltholes. Time was short, so they could not be price-sensitive. Post-lockdown, a similar surge occurred, though this time of people looking to move permanently to a more rural location, and to rent whilst finding a place to buy. Having, in many cases, agreed the sale of their current home and under pressure to agree a completion date, their time was short, too. They wanted to rent for a year at the very most (which is not always welcomed by landlords), but time pressures made them less price-sensitive (which is). Added to a background of rising general demand, this Covid-driven activity has pushed rents up, at least for the kind of houses most want. What kind is that?
In relation to lease, location and property, convenience and flexibility triumph over everything else. Tenants will pay for options to break early and to extend. They will of course pay for convenient locations, but the short walk to the town centre and train station now has to compete with the ability
to walk directly from home into open countryside. Similarly, as ever, tenants want warm, high quality homes where everything works properly, but now they also value options such as being able to close off a private corner within those big, open plan living areas, and outdoor spaces suited to entertaining even on chilly autumn evenings.
Flexibility, though, works both ways: landlords are concerned about reduced legal rights coming on top of higher taxes and tighter, more expensive credit. Combined with rising capital values, this is persuading a few to sell. Most, though, are simply being more cautious about whom they accept. This makes tenants able to offer larger up-front payments highly attractive. This can make sense for tenants too, provided they have cash or can access low loan rates: the difference between rent paid monthly and paid six months, or even a year in advance, could appreciably exceed the cost of the loan. The security that such an arrangement brings to landlord and tenant alike, relieves pressures on both.
Opposite page:
Top: West Sussex £3,000 pcm (Chichester)
Bottom: Kent £7,000 pcm (Sevenoaks)
What will £1,000,000 buy in the country?
More than four times the current UK average house price of £235,000 (Land Registry), what a million pounds secures, varies greatly across the country.
This page, clockwise from the left: Kent £1,250,000 guide
(Cranbrook)
Gloucestershire £800,000 guide (Chipping Campden)
Yorkshire £950,000 guide (Yorkshire)
Devon £1,150,000 guide (Exeter)
Opposite page, clockwise from the top: North Devon £795,000 guide (Barnstaple)
Norfolk £1,175,000 guide (Norwich)
Cheshire £1,050,000 guide (Chester)
Surrey £975,000 guide (Oxted)
Central London demand is being driven by people keen to be back at their office, but having to work some days from home. Needing somewhere to live where this is practical, they are taking advantage of greater choice, while it lasts.
There is an irony here. Amidst accusations of staff getting too comfortable working from home and being in denial about its shortcomings, central London office employees want nothing more than to get back to their desks full time. In most cases, it’s why they live, where they live, having prioritised location over space. True, incomers are typically astonished to find how strong community life can be in places like Holland Park and Pimlico and yes, to be part of a quieter, more relaxed London has been an enjoyable revelation for many – but they still want to get out and physically go to work.
To allow social distancing, many businesses are restricting office numbers and some big employers, including NatWest and Standard Life Aberdeen, have announced that most staff will not be returning to their City offices until 2021. Suddenly, the pied-à-terre you took thinking you would only be there whilst you slept, has to double up as your office as well. Perhaps the most affected have been couples in small one bedroom flats, each facing another day of hours spent participating in different video meetings. Like so many others, they need at least one more room. With a door.
The good news for central London renters able to move anytime soon, is that they can probably afford that extra room. Demand from tourists for short term lets has been close to zero, pushing thousands of Airbnb apartments onto the longer term rental market. With numbers of wealthier foreign students also much reduced, supply is high and rents have adjusted accordingly. As well as enabling locals to trade up, much firmer rental markets further afield have cut the central vs. suburban price differential, tempting others to move closer in. If you want to live more centrally, now is the time to make that move.
Tenants who feel in a stronger negotiating position sometimes push for a break clause after just six months. In the current market, however, this looks self-defeating. If anything, it makes sense to fix for a longer term, whilst rents are more affordable. Most landlords will consider up to three years.
Opposite page: Top: Lupus Street SW1 £2,350,000 guide (Pimlico)
Bottom: Wimbledon Park SW19 £14,950 pcm (Wimbledon)
Below: Queensway W2 £2,275 pcm (Holland
As with Lettings, the London Sales market shows strong differences between centre and suburbs – though both are exceptionally busy. Even allowing for the lockdown period, our Pimlico & Westminster office is set for its best year ever. So who is buying? In most cases, it is existing local residents who were renting. Attracted by lower stamp duty (two bed flats in SW1 start at around £650,000) and low interest rates they, too, are taking advantage of an improved supply. Significant demand is also coming from families selling a less central home and opting for the ‘flat in London, house in the country’ lifestyle which, until recently, was impractical for working couples (this is also likely to increase calls for a season ticket which can be legally shared). Is there any demand from overseas buyers? Yes, most certainly and, in common with almost all who are registering with us now, they want to be long-term owner occupiers, which augurs well for the areas in which they are buying.
Beyond central London, higher levels of supply and demand there, too, reflect a broader picture of social change. Our Teddington office is seeing a higher turnover of stock at all price levels than for some years. There and across London it seems, lots of residents are on the move. Their reasons why, vary greatly, but it is rare for coronavirus to not be a factor, as people re-evaluate their working lives and their relationships with their home and community and strive for something better. What they want has changed from a few months ago. It is more nuanced and sometimes harder to define. We are fully aware of this and, if you think we can help, we promise to listen, to avoid making assumptions – and to help you find it.
Built for an outstanding parliamentarian and later owned by Earl Spencer, this elegant house epitomises the subtle transition from Queen Anne to Georgian styles. It also begs the question: what are triglyphs and guttae?
Even before it was built in the 1720s, Dallington Hall had history. It replaced the home of Sir Richard Rainsford, an MP during Charles II’s Cavalier Parliament and so successful a lawyer that he became the head of the judiciary in England and Wales. Sir Joseph Jekyll, the man who demolished Rainsford’s home to build Dallington, didn’t do quite so well as a lawyer: as Master of the Rolls, he was only the country’s second most senior judge. As a parliamentarian, however, Jekyll was extraordinary. Across 40 years, he was returned as an MP no fewer than twelve times. Described by the poet Alexander Pope as “a Whig who never changed his principles or his wig”, Jekyll championed electoral reform, anti-corruption laws and, via the 1736 Gin Act, alcohol restriction – prompting such public anger, he needed armed guards at his door.
Dallington Hall is described by Historic England as featuring “Doric end pilasters under entablatures with triglyphs and guttae”. For the uninitiated, pilasters are merely decorative, whereas Doric columns, hold the building up. Triglyphs are the groups of three vertical channels in the tablet above the column and they must have six, small, peglike features – the guttae – underneath. A plain entablature without both triglyphs and guttae, is not Doric, but Tuscan. Such distinctions are, architectural historians assure us, very important.
Building new homes involves a constant flow of information and materials between planners, lawyers, surveyors, construction teams and their suppliers. Lockdown stopped that flow as suddenly as freezing a movie in the middle of a chase. When the action started again, some of the pieces had been moved.
The more obvious differences were macro, big picture concerns. Increasing the supply of new homes is a political priority, so the loss of a period during which 60,000 should have been completed was always going to affect government policy. Thus, unsurprisingly, the government moved a key date within the current Help to Buy scheme, giving an extra two months for construction completion to 28 th February 2021. The scheme is still scheduled to be replaced on 1 st April 2021. Much more dramatically, the government also announced a ‘Build build build’ programme, consisting of enhanced permitted development rights from September 2020, plus a much broader set of reforms – Planning for the Future – with a consultation closing date of 29 th October 2020. The September changes will allow greater freedoms to, without planning permission, extend houses and to convert commercial properties to residential. The broader reforms promise a far more wide-ranging impact: “...homes will be built quicker by ensuring local housing plans are developed and agreed in 30 months – down from the current 7 years it often takes”. The paper includes proposals that every area should have a local plan and, controversially, that no objections will be heard to developments deemed to be in accordance with it. To see and comment upon it, please visit
For contractors and professionals involved in the construction process, lockdown highlighted how fragmented and complex that process is, and how weather-dependent (almost countrywide, the lockdown weather was sunny but not too hot: perfect for building). As in other areas of life, we believe this will accelerate a trend which was happening anyway: in this case, the move towards modular home construction. Gaining acceptance from local authorities, lenders and buyers alike, modular construction involves most work being done off-site, under cover. Safer, cleaner, easier and much more convenient for construction workers, it is also faster (a major government objective) because construction of the house can take place at the same time as the preparatory groundworks, and in any weather.
Developers and house building companies, meanwhile, emerged from lockdown into a market in which buyer demand is strong, but different. Investment buyers, especially from overseas, are rare, as are those keen on ultra high rise buildings. A significantly higher than usual proportion of buyers are moving to be closer to family. They ask about broadband speeds high enough to facilitate video calls taking place whilst someone else live-streams a
movie. They ask about where they might charge their electric car and, sometimes, their electric bicycle, too. They want some outside space in which to relax and to grow something edible, if only a few herbs. And they are interested in community. In short, new home buyers, at least in the middle and upper markets, are taking a notably more holistic view of the place in which they are thinking of living, as well as the space. Over time, this will reward higher quality, more forward thinking developers, especially where their work can integrate with more enlightened urban planning.
Even though we believe interest rates have bottomed out, we anticipate rate cuts for those fortunate enough to need loans which are low, relative to the value of the property (generally 60% or less). For lenders, this is a large, low risk, highly attractive part of the market.
We expect lenders to use higher margins on their other products to compete aggressively for low loan-to-value business. Indeed, at the time of writing, HSBC has just cut its 2-year fixed rate to 1.14% and its 5-year fixed to a market leading 1.34%, but only for borrowers needing no more than 60% of value.
To help them cope with demand, lenders are raising the credit scores they require for both owner occupiers and landlords, turning away borrowers who do not meet the new, tougher criteria. We think it will be a long time before lenders return to pre-pandemic rules, highlighting once again the importance of maintaining a strong credit history.
Private bank Hampden & Co has recently launched a new retirement interest only mortgage for personal clients over the age of 55. Although this type of product has been around for a while, it is new territory for private banks, whose entry increases its potential as a valuable estate planning tool.
Lenders are expecting continued growth in the strengthening holiday let mortgage market. In anticipation, the Leeds Building Society has just relaunched a new fixed-rate holiday let product for up to 70% loan-to-value.
For independent advice, contact Private Finance on 0870 600 1650 or jackson-stops@privatefinance.co.uk.
An author and broadcaster who began writing whilst Style Editor at Harpers & Queen, Peter’s focus is on social groupings: he believes people at the top, should not escape scrutiny. He is President of The Media Society and attached to the London College of Fashion.
I’ve just seen a flat for sale online that I really liked. It’s just up the road. Not my current road, but my childhood road up in London NW3. A road I still go back to constantly. It’s next door but one to my late aunt’s house. And its big 1890 drawing room is absolutely chock-full of Victorian ‘gingerbread’ joinery and plaster. It’s a lovely sliver of a big old house.
But I’m not moving. During lockdown, when people were stuck at home, when sales of DIY stuff soared, they were asking themselves: do I really like it here, and if I have to live here for ever, can I make it work for me? I looked into every cupboard and drawer, saw things I didn’t know I had, things I’d forgotten, things put away neatly by other people – sheets and shirts, print-outs and bills in lever arch files. And enough of most things to see me through.
Everything I liked about the flat when I bought it was still true in spades; another big drawing room with lots of Victorian gingerbread, the big front balcony, with the bit over the porch big enough for a (small) supper party. And – the best London luxury of all – the view over the garden square. This is my third London square home, and it’d be hard to give them up. And I like what’s in it too. There’s a lot of stuff – inherited, given and bought. Pictures of friends, pictures by friends. Some ‘good’ – my parents' clever Victorian buys, back when no-one wanted them –plus some engaging boot-fair rubbish. Side by side.
This flat is another sliver of a Victorian haut-bourgeois stucco terrace house; in turn part of a Thomas Cubitt stucco cliff, built for a steadier, servanted life. The only problem, is me. Rationally, I don’t need another thing, I need to enjoy what I’ve got. And I should
get rid of some of it. So if I never moved again, never bought a retreat out of London – I nearly did back in 2016 – that’d be fine (I’m still looking of course!).
I dream about discovering new rooms. But I wake to thinking that I’ll ask the talented architect two streets away – the husband of the brilliant gardener who makes the garden square so beautiful on a shoestring – to devise me some clever space-saving storage. Like the clever secret spaces in his own house.
I’ve got a Grand Plan for everything, every last thing (The Joy of Things is the subject of my next book –where I challenge darling little Marie Kondo to a knockdown fight). But I need people to help me do it. To re-paint walls flaking from the great blocked-gutter water overflow of April, to hang heavy stuff that needs two strong blokes, to switch round light fittings. And to hump heavy things in and out, wiggling them round my little curved internal staircase.
At the moment, looking into every cupboard, pushing and pulling every bit of furniture has created unimaginable chaos, like those documentaries about sad hoarders who can’t move in their own homes, for things.
So all I can do, while we’re waiting for the All Clear – or a Bit Clear provided everyone wears masks and cleans everything every hour – is tidy up. Bigly. That’s where I am with Marie Kondo, about the joy of reordering things. I’m hugely looking forward to it.