Key factors set to drive the property investment market
Dave Pinnington is CEO at Finance 4 Business
It’s been a turbulent time for most industries since COVID-19 shook our world in 2020, with shockwaves still emanating through our lives.
The property investment world is certainly one of the sectors that has taken a hit, and opportunities have been few and far between for those looking to make a profit in this previously fruitful arena.
But with Q4 looming, things are looking up, and there are some current and imminent factors likely to affect recovery and upsurge in the coming months. There are no miracles in any area, it seems, but some light at the end of the tunnel is starting to glow brighter.
End of SDLT holiday should see prices stabilise
The SDLT holiday saw homeowners race to capitalise on the saving of up to £15,000, as the nil band for residential properties was increased from £125,000 to £500,000.
This provided a real stimulus for the residential property market, supported by reports of a 50% increase in transactions in Q1 2021 when compared with the same period in 2020. But as demand grew, prices were hiked in accordance, making investment opportunities largely non-viable.
As of the end of June, the nil band reduced to £250,000 until October – after which time it will return to the pre-holiday amount of £125,000. This should hopefully see a return to more normalised property prices, and although unlikely to take a tumble, they should start to come down – offering the property investor a helping hand.
‘Freedom day’ gives green light for in-room auctions
The success of the ‘virtual’ property auctions spurred by pandemic-induced restrictions could be debated – with some auction houses hailing them as the future, while others questioning whether the buzz of a real-life auction room could ever be replicated online.
Regardless of your stance, the fact that they can now hold in-room auctions is likely to be a catalyst for heightened investor activity.
The property auction industry is unlikely, however, to race back to physical auctions – so we could see more of a hybrid scenario, as many invested in the infrastructure to facilitate more remote bidding.
It’ll be an interesting one to watch, but an area we feel could be a positive development for property investors.
Lifting of renter eviction ban could free up stock
With the hotly debated ban on rental property evictions enforced by bailiffs ending on 31 May, there should be a more fruitful pool of buy-to-let properties as landlords may decide to cut their losses or may have faced other financial difficulties themselves that force a sale.
There won’t be an overnight influx, as the requirement for six months’ notice that can be served on a tenant, as a result of the Coronavirus Act 2020, is being reduced to four months until 30th September. However, it could be an indicator that more properties could be available on the market, and offer another glimmer of hope for property investors.
End of furlough likely to spur repossessions
With the Coronavirus Job Retention scheme becoming a huge safety net for businesses and employees, and while the continuing re-opening of the economy resulted in lower numbers using the scheme, it is estimated that some 3.4 million jobs are still on furlough.
Millions of employers and employees are going to be affected by the phasing out of the scheme. As the winding down of the support is phased, it’s anticipated that redundancies are likely to occur over the summer ahead of the scheme close.
This could have an impact on property, as falling behind on mortgage payments could be a sad result of job losses. We expect some stock to be released into the market as a result.
So while it’s been a tough time for those in property investment there still looks to be some real game-changing variables that could swing in the favour of investors. It’s one to watch.