The Ripon Sales Market, Post-Lockdown – the First 100 Days
With only around 1 in 5 Ripon house sellers actually selling their home in the last month, Ripon sellers and buyers will need to continue to be pragmatic if the surprisingly strong current levels of activity in the Ripon property market are to be sustained.
To start, we had the once in a lifetime event of the credit crunch in 2008, we then had another once in a lifetime event with the Brexit vote in 2016 and now the mother of all ‘once in a lifetime’ events, Coronavirus in 2020 – three once in a lifetime events in the space of 3 Olympic Games!
The doom-mongers forecast that the British property market would drop like a lead balloon on the scale of the 1989 housing crash (where property values dropped by 30.87% in a couple of years) but would be nothing compared to the tsunami that was Covid. Yet in the first 100 days of the property market coming out of lockdown, behavioural and economic changes mean that many Ripon homebuyers are now even more dedicated to moving home and the Ripon property market is doing quite well.
Going into lockdown, the effect on activity in the Ripon property market during those two months was expectable and predictable as it was placed in suspended animation during April and May. When the Ripon property market re-opened in mid-May, nobody predicted what happened next. Of course, many of us in the property industry estimated some release of pent-up demand from the Boris Bounce, yet nobody anticipated such a ricochet in activity in the Ripon property market.
This is particularly interesting when one considers GDP dropped by 20.4% in Q2 2020 (fascinating when compared to notable historic times when it dropped by 13.8% in WW2 and 16.7% in WW1), yet amidst the largest contraction in the UK economy ever in a single quarter, what wasn’t expected was an increase of potential property buyers and property sellers wanting to move post lockdown.
Some have cited this boost to the property market on a number of factors. Firstly, we have had the Stamp Duty Holiday, others have pointed at the never seen before 0.1% Bank of England base rates making mortgages cheap, then we had the furlough scheme which protected so many jobs and finally, the pent-up demand from the Boris Bounce.
Yet, when one actually talks with Ripon buyers and sellers, whilst all of them cite one or two of the above reasons, all of them mention and talk about how the lockdown has made them re-evaluate and reconsider how they want to live, their work-life balance and where they want to live. This is also reflected with tenants changing their requirements when looking for a property to rent (so Ripon landlords – be aware of this).
Demand for apartments in the centre of Ripon has eased off, whilst demand for property with a good-sized garden or other outside space has increased. One question we get asked all the time is also the broadband speeds, although they are quite decent in Ripon (the average broadband in our local Council area being 38.1 Mbps download and 7.6 Mbps upload).
So, with record numbers of Ripon properties coming on to the market – is it boom time for Ripon homeowners?
Of the 81 properties that have come onto the market in Ripon over the last month,
only 15 of them have agreed a sale
(a percentage of 18.5%)
That means around 4 out of 5 Ripon people that have placed their property onto the market have not found a buyer yet.
Yes, the Ripon property market is good, yet the number of people who have placed their property on the market has also gone up. Ripon estate agents have never been so busy putting property on the market and I feel sorry for the chap who is putting up all the for-sale boards – his wife hasn’t seen him in daylight for weeks!
But that does mean you are in competition with so many other properties on the market (the number of properties coming on to the market typically at this time of the year is about a third to half less). The Stamp Duty boost ends in March 2021, so that means you need to have found a buyer by November at the very latest. By overegging your asking price, to test the market, might mean you will lose out on this hiatus and could end up missing the boat!
The prices being achieved for the Ripon properties
that have been selling have been fair and realistic and have stood up much better
than many were originally predicting.
Yet as the country looks forward, given the ambiguous nature of the outlook for the British economy and the possibility that Covid-19 may be with us for a little while yet, I must implore Ripon property sellers to be realistic with their asking price so a greater number of you who want to make the move, are able to do so.
With immediate effect the new Stamp Duty Land Tax (SDLT) threshold of £500,000 will apply and will run until 31 March 2021. This means any buyer purchasing a primary residential property between 8 July 2020 and 31 March 2021, up to the value of £500,000, will be exempt of paying Stamp Duty.
According to the release by the Government the exemption will apply to all primary residential property purchases, so regardless of whether the purchaser is a first-time buyer or someone who has owned a property before.
This means that on purchases over the £500,000 threshold, buyers will pay a 5% SDLT on the portion from £500,001 to £925,000, 10% on the portion from £925,001 to £1.5 million and 12% on any portion over £1.5 million.
When it comes to purchasing a second home, the Government has introduced higher additional rates with a 3% higher rate on top of the new revised standards. For people purchasing a holiday home up to the threshold value of £500,000 they will pay 3% SDLT. Those buying a second home over the threshold with pay 8% on the portion from £500,001 to £925,000, 13% on the portion from £925,001 to £1.5 million, and 15% on the remaining portion over £1.5 million.
At Joplings we have experienced an increase of valuations and new instructions with clients looking to take advantage of the savings that can be made by the reduction in Stamp Duty Land Tax. Many buyers will not pay any stamp duty when purchasing a property up to £500,000. This money could be used to purchase a new kitchen or bathroom suites for their new home.
To take advantage of this we believe you need to place your property on the market as soon as possible, ideally before the end of September to give yourself the best chance of selling before the 31st March 2021.
For a free valuation to see how much your property is worth contact us at our Thirsk or Ripon office.
Call us on 01845 522680 or 01765 694800 for further advice and information.
Are you thinking of getting on the property ladder this year? It is often a daunting task, but interest rates are currently low and there are government schemes that can help, too. We asked Guild agents across the country for their advice to help more people buy their first home sooner.
- “Do research on how much finance you can secure based on your current salary.
- Know what deposit you need and what Help to Buy schemes (www.helptobuy.gov.uk)are available in your area.
- Determine how much deposit you actually need, taking into account your purchasing costs.
- Research exactly what your purchasing costs might be to your lawyer, your bank, and surveyor.
- Work out where you want to live or indeed be comfortable living in that location.
- Work out the time frame. Buying a property often takes longer than people imagine.
- If your family is helping with a deposit, then make sure you give them plenty of warning as their capital may be tied up in a savings scheme that requires more notice than just one week or a one month.
- Finally, it is more important that the deposit is large enough to help secure the property in the location you like.”
“I often encourage people in rented accommodation to compromise on what they want in the short term to be able to purchase their own home. Once they buy a property, they can work on overpaying their mortgage, which will give them a larger deposit in the longer term. Often moving to a slightly more affordable area in the short term is the key.”
“We would like to see more pressure put on mortgage companies to offer products with higher loan to values which are specifically aimed at first-time buyers. Personally, we do not see many new developments within Dartmoor or the Teign Valley, where we conduct a lot of our business. More targeted products to allow younger people to get on to the property ladder would be a massive boost for first-time buyers, too.”
“In recent years, high property prices have made it difficult for first-time buyers to get on the housing ladder. Despite this, it is a good time to take the first step into property ownership. Mortgage interest rates are incredibly low at the moment and the government offer various schemes to enable first-time buyers to get on the ladder with a small deposit. These schemes include, Help to Buy options and shared ownership schemes. The advice of a good mortgage company is invaluable. Also first-time buyers will need a minimum deposit to get started aside from help from the “bank of Mum and Dad”. There really is no substitute for saving and starting early.”
“What is my advice for a first-time buyer? Find your ‘inner estate agent’. It is essential that your first step is the right one. So you need to make sure that you buy your home for the right price. If you research the market properly, this will give you a head start when making an offer.”
“We seem to think that it is harder now for first-time buyers to purchase a property than it was for our parents and their parents. I always feel that it has always been hard, in fact with the various government schemes and banks offering 95% mortgages, it could be argued that it is easier now than it has been for a very long time. It is easier said than done but my advice for first time buyers is to spend less and save more.”
- “Make sure you are on the voters roll, even if you don’t want to vote.
- Check your credit file.
- Get a credit card, spend a small amount each month and then repay it immediately, it helps you build up a credit file profile and shows lenders you can handle credit responsibly.
- Shared Ownership is the best scheme in our opinion.”
“We recommend people bide their time, save like crazy and keep an open mind regarding the type and exact location of the property. When ready to buy, think value-for-money and learn to get handy using power tools. Before committing, we also advise our buyers to factor-in all the buying costs including legal, repairs and of course block service charges. Lastly, strict monthly budgeting and maybe even taking in a lodger can help soften the load.”
“There are a few things first-time buyers should attend to before taking that first step onto the property ladder. Although the Internet, parents and friends are probably the first sources of advice be aware the advice isn’t necessarily relevant or correct. The first and most important piece of advice you can take is from an independent mortgage advisor. You may find you can afford the property you didn’t think was in your league, or adversely you may find you really don’t have the budget for the property you wanted. It is also important to research the area you’re looking to buy in.”
Many in the property industry have called out for the new Prime Minister, Boris Johnson, to act decisively on his previously proposed plan of possibly scrapping Stamp Duty on homes under £500,000, at the same time cutting it from 12% to 7% on properties valued at over £1.5m. The hope is the proposed changes would mitigate the potential negative impact of the recent political instability and would improve buyer confidence in the market.
In the past, Prime Minister Boris Johnson had said that he would potentially call for an emergency Budget meeting in September where he would implement changes to current Stamp Duty legislation and drastically raise the threshold to the aforementioned £500,000. Excessive Stamp Duty charges have long been a challenge for those on all levels of the housing ladder, so both buyers and sellers will now be eagerly awaiting confirmation on how he intends to address this.
Free up over 300,000 buyers from Stamp Duty
Should the proposed changes be made it would essentially free up over 300,000 property buyers from having to pay Stamp Duty, based on figures from 2018/2019. The number could even increase as sellers just over the threshold drop their price to entice interest. When you consider the homes sold that are already exempt, over 650,000 transactions from last year would not have had to pay the tax.
The change could mean that entire regions where the average price of property is below £500,000 would be lifted from paying Stamp Duty. This would boost transactions in these pockets of the market and assist with economic growth in these areas.
Possible switch from buyer to seller
Johnson had also said that he may switch the responsibility of paying the tax from buyers to sellers – a drastic move that would greatly benefit potential buyers. Taking Stamp Duty off the table for prospective buyers would be a huge advantage, particularly for those who are looking to upgrade to a larger home to meet their growing family needs. However, the change would bring about a few issues. For example, someone who is currently selling their home would have paid Stamp Duty on it when they purchased it. With the proposed change, they would then have to pay it again when they sold. Essentially, this would equate to double taxation. Sellers may also push up their asking price in a bid to cover the additional Stamp Duty charge they would incur.
There is also the question of retirees who are selling to downsize. Selling a large home would mean paying higher levels of Stamp Duty, which would be a blow for someone planning for their golden years.
More buying power for first-time buyers
As it stands, buyers purchasing a home under £300,000 are exempt from paying Stamp Duty. The proposed increase in the threshold would give them the option to purchase a higher-priced home, while still being exempt. This is provided of course, they can afford a home over £300,000 and have the money for the deposit and other costs involved in purchasing a property. A study from the Royal Institution of Chartered Surveyors found that there had been no significant positive impact on property sales after the change in Stamp Duty in November 2018, so perhaps it is unlikely that any further change would bring more first-time buyers to the market. That said, the number of first-time buyers continues to increase, which can be attributed to other aspects such as Help to Buy.
Get the market moving
The idea behind the proposed policies is to the get market moving in sectors below £500,000, as well as those at the top end. The hike in Stamp Duty for homes over £925,000 in November 2014, greatly effected the top tier of the market slowing it to a near standstill. Ever since, transactions in the upper end of the market have suffered. The proposed cut from 12% to 7% would do much to invigorate this end of the sector, even if only for a time.
Iain McKenzie, CEO of The Guild of Property Professionals, said he would welcome any positive move by the new Prime Minister on Stamp Duty and taxes on landlords. “I am in favour of anyone who is going to improve sentiment or confidence in the housing market. Current economic data is strong, but the uncertainty of Brexit has caused stagnation in the market. Mr Johnson’s commitment to ‘deliver Brexit’ on 31st October with a new ‘can do’ spirit is therefore very much welcomed.”
While the changes are merely talk at the moment, should they come about, it will be intriguing to see what impact they will have on the market moving forward. For more information about the current Stamp Duty thresholds read our blog on the subject.