From the Governments announcement on 31st October we have updated this article.
Late Autumn is not usually the time home owners think of selling their houses. With the nights drawing in and thoughts move to Christmas it is historically not the best time to sell.
This year is very different!
COVID has changed everything and has turned the property market on its head. We are seeing unprecedented demand from buyers throughout the UK wanting to move to Devon. The continuing local lockdowns and worries about infection rates where they live have focused their minds and they want to move away from the busy towns and cities where they live. Unfortunately they are finding it increasingly difficult to find a home as the recent increase in demand has meant that most properties have sold over the Summer months. These have not been replaced so there is a distinct lack of supply of houses in the market which in turn means very good prices are being achieved for the properties being marketed at the moment.
As with the first Lockdown we are once again expecting enquiries to increase greatly as people have more time to research their house move. Being confined to your home in the cities during the summer was a hardship, however with the weather turning and nights drawing in the need to be living in a more spacious home, hopefully with a garden and easy access to wide open spaces will become even more necessary. Since it is business as usual for the property market we expect to see an increase in demand for properties in Devon & Cornwall and are envisaging a very busy run up to Christmas as lockdown restrictions ease and purchasers still hope to benefit from the stamp duty holiday. So rather than waiting until Spring, getting your house on the market now will give you the advantage of being one of few properties currently for sale, combined with the fact that purchasers have more time to search and view on line or in person depending on their location.
Stamp Duty Holiday
The government Stamp Duty holiday, where there is not Stamp Duty charges on the first £500,000 of the purchase price, ends on 31st March 2021. Many of the potential clients we meet feel that this is a long period in the future and they have time to bring their home to the market. They could not be further from the truth. The increased sales over the last months has put and incredible strain on the conveyancing process with solicitors barely coping with the volume of sales they are dealing with. The Council Local Authority Search departments (which are essential for any sale),are experiencing the same problem with searches taking just over 4 weeks in the South Hams but in some areas like Cornwall they are taking 6 to 8 weeks and longer in other areas.
We feel the demand from buyers wanting to take advantage of this relief will decrease hugely towards the end of the year as they realise they will not be able to buy in time to benefit from the scheme.
As with everything else at the moment the mortgage companies are seeing unprecedented demand with resulting delays. One sale we are dealing with at the moment the buyers mortgage company will take 4 ½ weeks to issue a formal mortgage offer and this is even before instructing a surveyor which can take weeks to fit into their diaries.
So even if you decide to put your property on the market tomorrow you are looking at 4 months before exchanging contracts (which is the date that Stamp Duty is calculated). So at the date of writing this article (mid-October) there is no real chance of exchanging before Christmas. This seems ridiculous but it is the reality of the situation.
Currently there are tax advantages in owning and selling a second home with Capital Gains Tax discounts if you are eligible. 21. The Government has spent approx. £300 billion due to COVID so far and it will have to get this back somehow and raising Taxes is probably the only way they are going to be able to do this relatively quickly. We have seen with second homes and Buy to Lets the government seems to favour targeting this sector of the market as mentioned in the articles from Todays Conveyancer and City Wire. Entrepreneurs Relief is available on Furnished Holiday Lets which considerably reduces the CGT on disposal but some pundits are estimating this to be revised and even go up to 40%. At the moment our second home owners are thinking twice about selling their properties as they are seeing a huge increase in bookings this year and into 2021. However if the property has been an investment for a pension and the idea was to sell to enjoy the profit they should think very carefully if the increased income over the next few years is really worth it. As with all Tax please talk to your accountant before making a decision.
The Property Market in 2021
Crystal Ball time! The demand from buyers wanting to move out of cities will continue to be high as many realise they will not be going to the office 5 days a week from 9 to 5. They will be looking for larger properties than they are currently living in as they will need home offices. With relatively large gardens and many of the properties having outbuildings in the South Hams there will still be demand. From people moving from larger cities the difference in price means that these buyers can buy larger for less and thus reduce their mortgages. This is a conversation we are having more and more with our applicants as they want to feel more secure and reduce debt to a more manageable level just in case there jobs status changes.
On a more sobering note the economic forecast is not looking good and we have not even touched on Brexit. We are looking at many years for a recovery and we feel there will be downward pressure on prices next year.
If you are thinking of selling our advice is to do it now as it could cost you a lot of money if you wait until next year.
Please contact the team at Chartsedge for a no obligation chat about marketing your property