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

 

 

 

 

 

 We look back at the major property events in 2021 and how they might affect the market in 2022.

 2021 has been a year like no other 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.

Cryptocurrency – can you buy a house using it?

 

  A look into the world of cryptocurrency and buying houses, we ask whether it’s even possible in the majority of cases, given the extra risks at play with Bitcoin.

 Recent years have seen the boom, bust and boom again of alternative currencies, which can be lucrative for investors but also famously volatile and unpredictable.

But are cryptocurrencies – the best known of which is Bitcoin – a legitimate means by which to purchase a property in the UK?

Here we take a closer look and explore what the future could be for property and cryptocurrency.

Can you use digital coins to buy a home?

Some 12 years after bitcoin was first launched, recent commentary suggests that investors are still finding it very difficult to use their digital money to purchase a house.

It can be hard to document bitcoin in the same way as a traditional pound sterling deposit, and mortgage lenders are told to report any deposit that appears too odd or large – something that crypto investments can fall foul of, leading to the need for further verification.

Buyers may find that lenders and conveyancers are unwilling to accept cryptocurrencies when it comes to purchasing a house because of the extra risks and suspicion at play.

Daniel Browne, a senior associate at London-based law firm Kingsley Napley, told the Financial Times recently that there is currently very low appetite for sellers to accept cryptocurrencies throughout the UK. As a result, if people want to use their crypto investments towards a house purchase, it will typically mean converting the cryptocurrency into government-issued currency like sterling.

Much of the reluctance to accept cryptocurrency comes from its well-publicised association with criminal activity, in particular money laundering.

In a recent advice column on whether cryptocurrencies could be used for house purchases, the FT said that, although most lenders are unwilling to lend money where some or all of the deposit is made from the proceeds of crypto, there are some big high street names who are now prepared to do so. This includes Nationwide, the UK’s biggest building society, as well as Halifax and Barclays. Buyers seeking to use crypto are recommended to search for a crypto-friendly lender as early in the house buying process as possible, as they may be more difficult to come by.

Even once this stage has been traversed, however, and you’ve found a lender willing to accept the likes of Bitcoin or Ethereum, buyers are likely to find it very difficult to secure a conveyancer willing to accept crypto.

That’s because conveyancers are required, under strict money laundering regulations, to implement measures to identify who their client is and verify that the funds they receive from a client are not proceeds of crime.

“This means that the provenance of the crypto assets must be understood, including the way they have been traded and with whom,” the FT advice article said. “This typically involves the instruction of an expert who is able to carry out a full audit on the crypto proceeds being used. That audit can then form the basis on which the conveyancer can make a judgment as to whether it is safe to proceed with the proposed transaction.”

There are firms out there who do, but they will be very hard to come by and very much in the minority. Before you commit to attempting to buy a house using crypto funds, you should first make sure you have a lender and conveyancer willing to accept this form of payment.

Has it been done?

There are isolated examples of homes being bought through cryptocurrency in the UK, but they are still very much the exception rather than rule. Buying homes via Bitcoin certainly hasn’t gone mainstream, as some might have expected by now.

In the rental sector, co-living brand The Collective started accepting deposits and rent in Bitcoin as far back as 2017, but it’s not 100% clear if this is still the case and it hasn’t really spread far and wide to other providers in the lettings sector.

Meanwhile, in the sales market, purchases made via cryptocurrency have been extremely rare – and unique stories as a result of that.

Back in December 2017, property developer Go Homes became the first to sell homes in the UK using Bitcoin, while the odd agency here and there has said they will accept Bitcoin to act as a USP. There have also been a number of luxury properties with have gone up for sale only accepting offers in Bitcoin.

On the whole, though, it remains highly niche, with worries over money laundering putting many agents, conveyancers and lenders off, not to mention the amount of due diligence and verification that is required in comparison to a normal house sale.

What about the future?

Some believe, with millenials more likely to invest in Bitcoin rather than traditional stocks and shares or placing their money in the savings accounts of high street banks, that mortgage lenders will simply have to start accepting crypto more readily to meet increased demand.

Research published by Charles Schwab UK earlier this year found that over half of young UK investors are now trading cryptocurrencies, while a further 70% view it as a ‘good investment’. However, there has been a push back against the rise in crypto investing, with the Financial Conduct Authority spending considerable sums on a campaign warning of the dangers of investing in cryptocurrencies.

Crypto companies can be notoriously difficult to regulate, with often a reluctance to work with regulators, which in turn makes the market potentially more vulnerable to nefarious operators. There have been a number of high-profile cryptocurrency scams which have played on the fact that many see it as a quick, easy and lucrative way to make lots of money.

Chris Sykes, associate director and mortgage consultant at Private Finance, told FT Adviser that he doubts UK lenders will accept bitcoin any time soon. 

“From looking at US clients' bank statements, often US mortgages work very differently to UK ones. Where UK mortgages are paid 99/100 by direct debit to the lender, in the US it seems that applicants physically send the money to their mortgage lender on a monthly basis,” he said.

As mentioned above, only a few lenders in the UK allow people to use crypto as a source of deposit, and even fewer allow it for the mortgage repayments themselves. Until this changes, and crypto becomes stable, trusted and mainstream – in the same way that banks are largely viewed, despite their own issues – then it will remain very difficult to buy a home using crypto in the UK. Especially given the fact that most conveyancers are reluctant to accept it and there aren’t many developers or agents happy to consider the digital asset, either.

If you’re a buyer looking to fund your purchase with crypto, you may strike it lucky and find a lender and conveyancer willing to help you, but this is likely to require a whole heap of research and is certainly something that is far from guaranteed.

For now, the traditional way of buying with pound sterling is king, but if cryptocurrency continues to grow at the rate it has over the last decade or so, this could start to change – with the buyers and sellers of tomorrow potentially being more comfortable in a world of digital coins.

Can blockchain speed up the conveyancing process?

 

 One of the most important parts of the home buying and selling process is conveyancing – the legal act of transferring home ownership from the seller to the buyer.
 
But it can be a slow, frustrating and cumbersome process, which has led to calls in recent years for ways of speeding it up.
 
A solution that has been discussed in the past is the use of blockchain in property transactions. Here, we take a look at what it is and whether it’s the answer to making conveyancing less laborious for all involved.
 
What is blockchain?
 
Blockchain, which is the technology that enables bitcoin and other cryptocurrencies to function, is an open, digital and distributed ledger which records transactions between two parties in an 'efficient, permanent and verifiable way'.
 
It aims to create a world where contracts (both property and otherwise) would be transformed into digital code and protected in shared, transparent databases, free from doctoring, deletion or corruption. The digital trail would also mean the contracts are easily validated and easy to track down.
 
Land Registry explores blockchain
 
As part of its two-phase digitisation programme, to work out how innovative technologies can make the house buying process smoother and quicker, HM Land Registry has been working with specialists to explore the possible benefits of blockchain for the property market.
 
The digital transformation project – known as Digital Street – has been analysing ways of improving the property buying process in the future, with Land Registry rigorously testing blockchain and recently successfully using a prototype of the technology to highlight how buying and selling a home can be made simpler and quicker by demonstrating a digital transfer of ownership.
 
To show how the emerging technology could be used to cut uncertainty and delays when people are buying a home, a trial was carried out on the sale of a semi-detached house in Gillingham, Kent.
 
“It was really straightforward,” said Stefan, the seller of the house in Gillingham who took part in the trial. “It shows how technology like this can help make everything so much quicker and you can see clearly what’s happening at every stage. If this is the way forward, it’s going to make everything easier.”
 
HM Land Registry’s prototype blockchain technology was developed through conversations with stakeholders across the property market, and tested with the close cooperation of Mishcon de Reya, Premier Property Lawyers, Shieldpay and Yoti.
 
At present, the Land Registry’s trials with blockchain are merely exploratory – and a way of proving that the technology can be used to speed up the conveyancing process.
 
“We wanted to work with the industry to make sure that we understood how forms of the blockchain network could work to benefit the industry as a whole,” a Land Registry spokesman said.
 
“We’re looking to take all we have learned from this successful test and discuss it further, internally and with members of the Digital Street community – which is comprised of regulators of conveyancers, mortgage lenders, and technologists.”
 
 “Land Registry is often cited as a potential use case of blockchain, so we thought we should be doing thorough due diligence [and] seeing what it can actually bring to the property market in the UK,” the spokesman added.
 
With delays to the buying process causing stress and, in some cases, the total collapse of the sale, anything that can be done to speed up currently slow property transactions will be welcomed by buyers and sellers alike.
 
While HM Land Registry isn’t yet ready to roll out blockchain technology to the masses, the successful recent trial suggests it could be a part of the conveyancing process sooner rather than later, reducing the risk of transactions failing or being abandoned at considerable cost to both parties.
 
Further trials and purchases by blockchain
 
Recently, a number of key PropTech players behind a trial of blockchain claimed that the technology can reduce the time of a transaction from the typical three months to something much closer to three weeks.
 
While few details of the trial have emerged, a statement from Instant Property Network (IPN) said it had successfully completed ‘a global trial of a new distributed ledger-based system, demonstrating the potential to speed up property transactions by months.’
 
The latest trial, facilitated by a blockchain software firm, ran transactions using test data through a new ledger system to simulate property sales over a five-day period and claims to have shown how costly duplications in the transaction process could have been removed.
 
“It’s estimated that, with the addition of off ledger business process and consumer decisions, the end to end buy/sell process could be reduced from over three months to less than three weeks,” IPN said.
According to IPN, each property transaction currently involves, on average, eight parties plus the buyer and seller, with data shared through dozens of documents, platforms and databases. This, it says, can cause errors, increased costs, uncertainty and delays in transactions.
 
To solve this, IPN has created a system where participants can join up their business processes and transact directly. Although the network does not store data itself, it has the capability to integrate with a company’s existing technology.
 
“This means that each party retains control over their own data - negating the risk of breaches and compliance issues and vastly reducing risk and the cost of continuous reconciliation of facts and data,” the statement continued. “The trial revealed that most companies will be able to deploy the platform in a matter of days, opening the door to widespread adoption throughout the property industry.”
 
The trial involved 40 organisations in 23 countries, with several familiar to UK transactions, such as Barclays, Clifford Chance, AXA XL, Royal Bank of Scotland, BBVA, Search Acumen, Shieldpay and Swiss Re.
 
Blockchain has, however, already been used in some house sales. In October 2017, electronic property transaction platform Clicktopurchase claimed to be the first to complete an online property transaction by blockchain for a home in Trowbridge, Wiltshire, while the same platform was later used by HS Property Group to sell a four-bed HMO in Oldham, Greater Manchester.
 
More recently, at an auction held by London-based Clicktopurchase, a Dublin house was sold using both blockchain and artificial intelligence (AI).
 
In this case, a verified bidder was able to submit an offer on behalf of a buyer, in turn creating an electronic offer with a legally binding electronic signature. Once the offer had been accepted by the agent, solicitor or seller operating the dashboard, a second electronic signature was added and an immediate online exchange of a property contract took place.
 
From the above, there certainly seems to be evidence to suggest that blockchain (and other types of new technologies) can play a key role in speeding up the conveyancing process, making transactions safer, quicker, simpler and more transparent.
 
A mass rollout still seems some way off, but the trials taking place and Land Registry’s high-profile digital transformation programme suggests a faster, more tech-led approach to property transactions is on its way. The days of frustrating delays and high levels of stress could soon be a thing of the past.
 

Three Easy Steps to Protect Your Property From Fraud

 

Property fraud is on the rise and your property is probably the most valuable asset you own so it is important to protect it from the risk of fraud.

People are increasingly falling victim to property fraud because the tactics fraudsters use are much more sophisticated.   Fraudsters are targeting properties by pretending to be you so they can try and sell or mortgage your property.

The Land Registry advise that you are more at risk if your property is one of the following:

• Rented out
• Empty
• Mortgage-free
• Unregistered  

Over the last 10 years around £55 million has been paid out under the Land Registry indemnity scheme because of forgeries.  Do not become a victim of property fraud and take these easy steps.

Firstly, you should make sure that your property is registered at HM Land Registry. Your property will be registered if you bought it or mortgaged it since 1998. If you are unsure, you can check with the Land Registry who will be able to confirm whether it is registered.  If your property is registered and are a victim of property fraud where you suffer financial loss, you will be compensated through the Land Registry indemnity scheme.

If your property is not currently registered with the Land Registry, then you can apply voluntarily for this to be registered.  The Land Registry charges a discounted fee for voluntary registrations and we can prepare these applications for you at Brethertons.

Once your property is registered, you must then keep your contact details up to date. You can include an email address or an address abroad.  Keeping contact details up to date is particularly important if you do not live at the property and have moved addresses since the purchase.  Many Landlords with Buy-to-Let properties often overlook updating their rental property contact details when moving home themselves.  

The second step is to sign up to the Land Registry Property Alert Service which is completely free of charge www.gov.uk/property-alert .  Once you have signed up to this service the Land Registry will notify you of certain applications affecting the property you are monitoring. You will receive a notification for example for a new mortgage or change of ownership.  You can monitor up to 10 registered properties in England and Wales. You don’t have to own the property, so could monitor the property for an elderly relative for example.

Alerts are normally sent by email but, you can still use the service if you are not online. If you receive an alert about an activity that seems suspicious you should take immediate action and contact the Land Registry Fraud Line.

Thirdly, if you feel that your property is particularly at risk from fraud then you can apply for a restriction to be placed on your property designed to help prevent forgery. The restriction prevents the Land Registry registering a sale or mortgage on your property unless a conveyancer or solicitor certifies the application was made by you.

It is important that you do what you can to protect your property.  

 

What does a property solicitor do?

 

 

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.

How to find a good solicitor

Perhaps the quickest way to find a solicitor is to use an online tool, such as The Law Society’s official database. This can help you find the nearest solicitors in your area, as well as details of their accreditations.

Your estate agent may also recommend a solicitor or conveyancer. One school of thought is to warn you against this, as the estate agent often gets paid an introduction fee for the referral.

However, good estate agents care about their reputation, and you’ll have the convenience of not spending extra hours doing research - they have already been vetted and service standards agreed prior to your estate agent making any referral to you.

Even so, it’s a smart idea to get a range of quotes so you’re not paying over the odds.

When it comes to some things in life, it’s better to be safe than sorry. Sure, buying and selling a home isn’t the cheapest thing you’ll ever do, but getting the professionals on board can save you time and energy in the long-run.