Post-Covid Changes and the Property Industry

With the arrival of the 1^st of October, three Covid measures that were brought in to revive the housing market and the economy, have come to an end. The three Covid related policies that are expiring are: tenant evictions, stamp duty and the furlough scheme. All three had a massive impact on the market and an influence on the substitutional growth in house prices and general activity.

Evictions

Length of notice periods for landlords and letting agents to evict tenants in England have changed from 1^st October. Previously, from the 29th of August 2020, “landlords were not able to start possession proceedings in most circumstances unless they had given their tenants six months’ notice” explains gov.uk. This has now changed to two months for Section 21 notice and two weeks for Section 8, the structure that was in place pre-pandemic. It has been reported that there has been a 43% increase in the number of eviction instructions during the period, versus the same period before the pandemic. Many professionals believe that the government now need to put emphasis on supporting landlords more, compared to their focus on protecting tenants throughout the crisis. With the changes also to universal credit, it is thought this will impact at least 100,000 renting households, who may be placed at risk of eviction when cuts are made by the government.

Stamp duty

After the first phase of the SDLT holiday came to an end in June 2021, the second phase, which saw the nil rate band change to £250,000 from £500,000, has now returned to £125,000, the rate which was in place prior to the pandemic changes. With no signs of the market calming down, professionals are still unsure as to how the end of the stamp duty holiday will affect the property market. It has become clear that “it was sellers and those already fortunate enough to have a firm foot on the property ladder who emerged as the real winners of the fiscal holiday, as prices soared and demand reached fever pitch” explained Director of Woolbro group.

Furlough scheme

The furlough scheme, which was announced on the 20^th March 2020, which supported businesses and employees financially throughout the pandemic, has now ended. In peak of the scheme in May, 30% of the UK’s workforce were furloughed. Experts believe that the financial aid from the government now ending will have large impacts on the housing market due to the unfortunate mass of job losses for businesses that are unable to continue paying their employees. Historically, any rise in unemployment levels have resulted in falls within house prices. This was evident in 1993 when unemployment in Britain rose to 10.5 percent, house prices fell by 20 percent.

All three structure changes have provided an evident growth to the property industry in some way, but professionals are now doubtful of how long this high can last. The Managing Director of Halifax has said that it is “very unlikely that the housing market will continue to remain immune to the economic impact of the pandemic and we believe that significant downward pressure on house prices should be expected at some point in the months ahead”.

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