Knight Frank has offered some recommendations for how the government can help the housing market get back on track after the Covid-19 crisis has started to ease.
The UK housing market – like every other component of the economy – is currently feeling the effects of the coronavirus outbreak that has affected countries, industries and businesses all over the world.
Restrictions on pretty much every aspect of life as we know it have had an inevitable impact on the property sector, with construction, transaction and investment activity all seeing a significant slowdown.
However, as we have seen many times in the past, the market has the strength and resilience required to bounce back from periods of adversity like the one it’s currently going through. That’s why many investors, analysts and stakeholders will already be looking to the future and thinking about the industry’s prospects for recovery in the second half of 2020 and beyond.
Tom Bill, head of London residential research at Knight Frank, pointed out that housing transactions have a “clear multiplier effect for the economy”.
“Different-sized businesses in all areas of the economy feel these benefits, which is something the government will take into account when drawing up its post-lockdown stimulus plan,” he added.
Knight Frank has predicted that home sales will drop by 526,000 in 2020 – a fall of 38% compared to last year.
To give the market the best possible chance of making a strong return after this year’s challenges, the firm urged the government to introduce some dedicated stimulus measures to support both supply and demand.
Stamp duty holiday
Despite the reduction in tax revenue the government is likely to see this year, Knight Frank said it “seems clear there will need to be a stamp duty holiday to get the market moving”.
Providing temporary stamp duty relief will make it cheaper for buyers to purchase a home, which will stimulate transaction activity and fuel price growth.
As well as being good news for new buyers, this will be welcomed by existing owners and investors who are keen to see the value of their property start to increase again.
Conveyancing – the process of legally transferring ownership of a property from the seller to the buyer – is in need of review, according to Knight Frank. The firm said both conveyancing and Land Registry searches “could be greatly improved and sped up to drive efficiencies”.
Legal and property industry bodies have already made efforts to improve the process, but there are calls for the government to support this and accelerate the move away from pen and paper by embracing technologies like blockchain.
Improvements to conveyancing will help investors when it comes to devising your exit strategy, which will often involve selling property on the open market.
Supply is just as important as demand where the health and sustainability of the property market is concerned, which is why Knight Frank has called on the government to allow improvements to planning procedures.
Legislation passed in the wake of the coronavirus outbreak effectively allowed councils to hold virtual planning meetings, but the firm said more can be done. It highlighted the example of more generous time frames to implement existing and pending planning permissions, to reflect barriers to developers being able to start construction work. Similar temporary powers were granted between 2009 and 2012, in the wake of the financial crisis.
Measures like these will support construction activity in the property sector and help developers get on with their jobs, ensuring a steady flow of new housing and fresh opportunities for investors.
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