A look back at 2021 – what were the main things that happened in the property industry?

 

 

The stamp duty holiday fuelled record high demand, while favourable lending conditions led to unprecedented levels of transactions working through the system.  

We’ve seen the launch of new housing initiatives, the delay of possible reforms, the continued growth of PropTech, ongoing issues with the leasehold and cladding scandal, and much more besides. 

As ever, the year will end with the portals receiving staggeringly high levels of traffic and visits as people use their downtime to search for their dream property. 

Of course, it’s impossible to condense everything that happened this year into a single blog. But here are some of the biggest things that happened in 2021. 

The extension and then end of the stamp duty holiday 

The first few months of 2021 were marked by pressure on the government from all quarters – including a petition which received over 150,000 signatures, triggering a debate among politicians – for an extension to the stamp duty holiday, which was originally due to end in March 2021. 

Eventually, the government relented and announced that the holiday would be extended until the end of September 2021 to avoid any dreaded “cliff-edge” scenarios. The holiday was tapered off and came to a total close from October 1 2021, with the ending already largely baked in and not causing a drastic fall in transactions as some had feared. 

The success of the stamp duty holiday has been much-debated, but its impact on the property market for much of 2021 was undeniable, driving high levels of demand among all types of buyers, with buy-to-let investors just as able to take advantage as downsizers and second steppers. 

There have been calls for stamp duty to be scrapped, or wrapped up with other property taxes in a new super-tax, but the money it brings to the Treasury makes this unlikely. 

The huge growth of PropTech 

Property got more tech-led than ever in 2021, with the tech revolution continuing to be supercharged by the pandemic.  

Whether it be Right to Rent checks being carried out remotely, the greater use of instant reservations, the continued use of virtual viewings or a host of PropTech companies stepping in to make the lives of property professionals easier, the growth of the sector is undeniable. 

According to recent research, investment into the UK’s fast-growing PropTech sector reached record levels in 2021 – and has more than quadrupled since last year, as the sector matures. 

Analysis by PropTech-focused venture capital firm Pi Labs examined UK PropTech funding round data for 2021 and found that there had been £1.6 billion of investment into the sector so far this year, a huge 360% rise from the £347.79 million seen in 2020 (when PropTech came into its own during the lockdowns). 

The figure was also more than 15 times higher than the £105.68 million of UK PropTech investment achieved in 2016, evidencing its rapid growth. 

The use of tech in property was dealt a blow by the devastating Simplify IT hack that took place recently – the repercussions of which are still being felt – and also arguably by the struggles of the online/hybrid model of estate agency, most notably in the recent troubles of scandal-hit Purplebricks. 

But, overall, the trend is towards greater use of tech, automation, and digitalisation in property – to speed things up and make lives easier. And this is likely to accelerate further in 2022. 

More new schemes 

From First Homes to the 95% mortgage guarantee scheme, 2021 has seen a number of new initiatives introduced by the Boris Johnson government. 

The success of the former won’t be clear for some time yet – with an expected increase in available new homes in 2022 – while the latter has been embraced by several high-street lenders and major banks, who have been willing to offer low-deposit mortgages again after having shelved them during the worst days of the pandemic. 

However, awareness of the scheme – or rather, lack of – could be a major problem. A poll conducted in September this year by price comparison site NerdWallet discovered that only 15% of working age people were aware of the government-backed 95% LTV mortgage scheme. 

What’s more, the survey also revealed that just 22% of under-25s were aware of how the scheme could help them, while 78% of working age people said they did not have a good grasp of the full support available to help them get on the property ladder, including Help to Buy and Shared Ownership. 

Worryingly, only 17% of under-35s understood that first-time buyers may not need to pay stamp duty and 19% did not know that mortgage lenders can consider day-to-day spending habits in mortgage applications. 

These findings suggest that, while lenders are on board and there are more 95% mortgage products available on the market for struggling buyers, the scheme may not be reaching its full potential due to a lack of awareness of the scheme. 

A strong market for 2022 

House prices and demand hit record highs in 2021.  

While the market is expected to cool in 2022 - with no stamp duty holiday in place, interest rates recently increasing (and potentially increasing again) and inflationary pressures on households - it’s still expected to be a strong year. 

Our most recent forecast, for example, based on an analysis of over 18,000 conveyancing quote forms, shows that demand will continue to outpace supply next year. We anticipate annual house price growth of 2.5% in January as 2022 begins on a strong footing. 

The current shortage of stock is backed up by low interest rates (even though these finally rose last week to 0.25%), which makes borrowing attractive. 

The idea of a busy but more normal housing market in 2022 has been backed up by Rightmove, who argue strong buyer demand carrying forward into next year and a bounce back in the amount of homeowners getting ready to sell should keep the market buoyant, if not quite at the same frenzied level as the last 12 months.  

The market was heading for a ‘less frenetic’ period, the property website said, with a more even balance between buyers and sellers as more homes are put up for sale and higher interest rates take some of the heat out of buyer demand. 

So, we can expect another busy year for the property market in 2022, if not quite reaching the heights of the past 12 months.

Equity Release, Is it right for me?

 

 

What is Equity Release?

Equity Release is a way of unlocking some of the equity in your property whilst you still reside there provided you are over the age of 55.

What types of Equity Release schemes are there?

There are two main types of Equity Release scheme; the Life Time Mortgage and the Home Reversion Plan.

Life Time Mortgage

The first type of Equity Release is known as a Life Time Mortgage. This is the most popular Equity Release Scheme and the Scheme which we deal with for the vast majority of customers looking to release equity from their homes.

Essentially what happens is you borrow against the value of your home, releasing a loan which can be used to provide an income, a lump sum or both. The interest calculated will vary depending on the option you take. The loan does not have to be repaid until you pass away or move into alternative accommodation. Interest is usually at a fixed rate, compounded monthly, rolled up and added to the outstanding loan so that the debt increases as time goes by.

Some Equity Release Schemes are portable, meaning if you want to sell your property and move to another it may be possible for you to transfer the loan the other property.   It is important to note that the equity release lender will need to agree to the loan being transferred to a new property. This will be subject to their lending conditions at that time and whether the property you wish to purchase is suitable to secure their monies loaned to you. You should also note that if you are considering downsizing at that time you may be asked to repay part of the loan you have borrowed.

The Equity Release Council builds protections into every approved provider’s plans. For example, they include a no negative equity guarantee, meaning that you will never owe more than the value of your home. You may also be able to protect a percentage of the equity in your property so that you are still able to leave a lump sum to your beneficiaries. A Financial Advisor can advise you on this in more detail.

Home Reversion Plan

The second type of Equity Release scheme is known as the Home Reversion Plan. This involves all or part of your home being sold to a private company known as a Reversion Company; in return for which you receive a cash lump sum, an income or both. You can remain in your house, rent free or for a nominal rent, for the rest of their life. When the property is sold, usually after you have passed away or if you need to move into alternative accommodation, the Reversion Company receives the proceeds of the sale, depending on what share of the property has been sold to them. With  a Home Reversion Plan you can protect a share of the property to leave to any beneficiaries in a Will.

Future Steps

If you are thinking about an Equity Release plan it is important to  contact an Independent Financial Advisor and talk to them in more detail about this. All Advisors dealing with Equity Release Schemes must have a specialist qualification. Earlier this year the Equity Release Council issued a new competency framework to support financial advisors in their professional development within the Equity Release market.

Should you so wish we can introduce you to an appropriately qualified IFA.

Once you have decided to proceed with your Equity Release scheme , you will then need to instruct a Solicitor. The Solicitor will need to meet with you face to face during the transaction and will need to advise you on all of the documentation which you are entering into, obtaining your signature to the Mortgage Deed and provide a Solicitors Certificate to the Equity Release provider.

 

The buyers guide to conveyancing

 

 

Buying a home is likely to be the biggest single biggest financial transaction you make, and to make sure that you get what you think you bargained for, it is worth having a conveyancer on board early in the process, so that you can act quickly once you have found your property.  We recommend an associated firm of conveyancers who offer our clients some of the best costs in the UK.

There are many detailed tasks to be carried out, particularly in raising and answering queries about the purchase and what is included, but these actions fit into a number of key steps:

Step 1:  Your conveyancer will contact the sellers solicitor/conveyancer and ask for the “information pack”, which contains 4 key items:

• property information form: a standard questionnaire, which will give details of boundaries (and disputes) and other key property information
• fixtures, fittings and contents form:  this tells you what is and is not included in the sale of the house.  There is often debate about what has been included in the sale (furniture, curtains, etc.), so you should be careful to agree with the seller what you are getting and let your conveyancer know if there are likely to be any areas of concern.
• title deeds:  these documents show that the person selling the property owns it, and secondly set out any rights or obligations that affect the property.
• contract: this is drawn up by the sellers solicitor/conveyancer, and sets out the main terms of the proposed agreement, including names and the price.

Step 2:  The conveyancer will then carry out a number of searches.  The local authority search is a list of questions about the property which are sent to the local authority. This search confirms a number of things, such as proposed changes to the local area, whether there have been planning applications on the property.  It doesn’t say whether there would be planning permission for any extensions you are thinking of.  You would need to request this separately.  If the property is in a mining area, then the solicitor will also carry out a mining search.

Step 3: You will then need to negotiate and agree the contract, based on this and any other surveys you have had carried out.

Step 4:  You next need to get a copy of a mortgage offer (if you are buying with a mortgage) on this specific property (not just an agreement in principle) which will be given once contract terms have been agreed.

 Step 5: You are now ready to agree a completion date (the date when the house becomes yours) and can exchange contracts along with a deposit.  This is no longer refundable if you pull out of the sale.  The minute you exchange contracts, the sale is set in stone – you must buy (at the price stated) and the seller must sell.

Step 6: Your conveyancer now draws up a purchase deed and send it to the seller’s solicitor/conveyancer, and reports to your lender, requesting mortgage funds.  Your conveyancer will then report to you requesting any residual balance, if applicable.

Step 7: Your conveyancer hands over to the seller’s solicitor the remainder of the purchase money (buying price less the deposit you have provided) and in return your conveyancer receives;

• the transfer document, which is needed to show the house is now transferred to you (and will need to be sent to the Land Registry) and
• the title deeds, which is the evidence of ownership and sets out the obligations on the owners.

You can now move in……………………………………..

What does a property solicitor do?

 

Find out why solicitors matter, and how you can find one.

Yes, the costs can add up when moving house, but having the right solicitor on your side is worth its weight in gold.

Here’s how you can make the legal side of your move run extra smooth.

Do you need a solicitor to buy a house?

Sure, it’s tempting to think you can dot the i’s and cross the t’s on all the legal paperwork, but it’s not quite so simple. Your solicitor helps to oversee the legal process of the sale so that ownership is lawfully transferred to you.

It’s true that you’re not legally required to use a solicitor when buying or selling a home, but these days, it’s virtually impossible not to use one. Issues like fraud are increasingly important and require legal oversight, and you’ll always need to prove your identity to the Land Registry using the correct procedures.

What is conveyancing?

Conveyancing is simply the legal transfer of property between two parties - a seller and buyer.

You’ll often hear the words ‘solicitor’ and ‘conveyancer’ used interchangeably, and while both a solicitor or a conveyancer may work on conveyancing matters, a conveyancer will not be able to work on any other legal matters; conveyancers are thus specialists in conveyancing only.

A solicitor may complete conveyancing work but could also act in other legal areas, however, most solicitors will now specialise in one area of law and a solicitor that completes conveyancing work will also be a specialist in conveyancing only.

Should I use a solicitor or a conveyancer?

There are experienced conveyancers and less experienced solicitors — and vice versa — so what really matters is that you get a sense of the experience, credentials and capability of the conveyancer or solicitor you want to employ to complete your sale or purchase.

Whether you use a solicitor or conveyancer, it’s reassuring to know that both are fully regulated and insured to complete your conveyancing

How much are the legal fees for buying a house?

For properties up to £1m, you can expect to pay between £1,000 and £3,000 on solicitors' fees, depending on the geographical region, and the scale and complexity of the transaction. The costs can increase quite a bit for higher-value properties.

Some solicitors will charge a fixed fee, or have fee arrangements like a ‘no sale/purchase, no fee’ agreement, and in complicated transactions, some may charge a percentage of the property value.

The overall fees include the third party costs associated with property transactions, known as ‘disbursements’. The most notable disbursements will be bank charges, property searches, Stamp Duty and Land Registry charges.

What does a conveyancer do?

So, what do you get for all your hard-earned cash? Here’s a breakdown of some of the main services your solicitor or conveyancer provides:

• Searches — Your solicitor will carry out checks with the Local Authority and other parties to see if there are any building control or environmental issues you should know about.
• Enquiries - Your solicitor will raise all the necessary enquiries with the other party’s solicitor to ensure that all the information you need to legally transfer the property into your name is provided and so that you have all the information required in order to be able to sell the property on without issue in the future.
• Bank transfers — In order to ensure funds reach the right accounts, the solicitor will carry out the transfer, which will incur a bank charge.
• Fraud checks — Transferring money can be a risky business, but your solicitor will verify both your identity and the legitimacy of the other parties.
• Stamp Duty — Properties bought for over £125,000 in England or Northern Ireland are subject to Stamp Duty; your solicitor can ensure you pay the correct amount.
• Land Registry — Your solicitor registers the property with the Land Registry and obtains the new title deed for you: this is the document which shows the ownership of a property.

What searches are required when selling a house?

Your solicitor will undertake numerous searches which can help establish whether there is any good reason not to buy the property.

These include the Local Authority search, which will shed light on any issues to consider in relation to the property and the surrounding area, from planning and building permission to conservation area status and tree preservation orders.

Environmental searches can uncover evidence of any toxic substances in the ground beneath a property from past industrial use.

Your solicitor will also carry out a water authority search, which will locate the source of water for the property, and whether any public water infrastructure exists on the plot.

Land Registry searches help to verify the legal owner of the property and make sure there are no onerous provisions or restrictions on the property and use of the same.

You sometimes have to pay for additional searches if the property is located in an area of potential risk, such as near a landfill site, coal mine or river where flooding may occur.

There are even searches on ‘chancel repair liability’, which we can assure you, is even stranger than it sounds. If you’re living within the parish of a church built before 1536, you could be liable for the cost of church repairs, though this is admittedly rare.

As you can see, there are lots of potential surprises that can crop up when buying a house, so even if the cost of getting searches done isn’t too appealing, it’s far better to know in advance if there is any cause for concern rather than buying a home you’ll struggle to sell later.

How long does conveyancing take with no chain?

If you’re moving into a property as a chain-free buyer, conveyancing can take as little as 4 weeks. But it depends on the type of property you’re buying, as leasehold flats tend to take longer than freehold houses.

Also, searches can take longer where there is concern about the property or the land it sits on. It may be more realistic to factor in at least 6 to 10 weeks for the conveyancing process to run its course.