Why are Property prices going up in a Pandemic?
Pent up demand
Any property buyers who were planning a move in the next 1-2 years have brought their plans forward due to fear of the property market shutting down again or further lockdowns imposed due to COVID-19. Many of those buyers are moving out from an apartment to a larger property or a house
with more outdoor space. Many people feel there is a window of opportunity to move quickly whilst they still can and are doing so.
Landlords cannot easily sell
One of the factors behind this is that recently the UK government has brought about changes in the law to the notice period which a Landlord must give a tenant. Before COVID-19 a Landlord and tenant would both need to give two months’ notice to end the tenancy after month four. Today, a Landlord must give their tenant at least 6 months’ notice to vacate.
Most Landlords have been compassionate with their tenants who are struggling to financially meet their rental obligations. Many have allowed tenants to stay with payment plans in place in the hopes to get all of the tenancy arrears cleared one day. As a result of this, many Landlords who wanted to initially sell have decided to sit on the fence, not sell for now; and see how things go. Remember – they are seeing some price rises recently which is keeping them invested for now.
Boris johnson offering UK citizenship to 3m hong kong resident’s
The UK Prime Minister Boris Johnson has recently offered UK citizenship to three million Hong Kong residents due to recent troubles with mainland China. Hong Kong is one of the wealthiest countries in the world.
(British Hong Kong used to be a colony and territory of the United Kingdom from 1841 to 1997) According to the London agency, Chestertons, In July 2020 the number of new buyers from Hong Kong has more than doubled year on year.
There are more buyers than sellers in some parts of London and so prices are shifting up – what is even more interesting is that new data has shown that buyers from Hong Kong are also moving into areas they have not targeted before – outside of the city, but still within 30+ mile radius.
They are targeting areas and properties with more open space than before – London is very popular with Hong Kongers and is viewed as a ‘safe-haven’ so they are keen to buy property close to London and close to excellent schools to educate their kids.
Stamp duty effect
The property market took off like a rocket as soon as Rishi Sunak announced the stamp duty holiday until 31st March 2021 – you can now buy a property up to £500,000 and pay zero stamp duty. Even property investors can make a saving on the first part of the stamp duty and only pay the surcharge. It certainly is a big talking point amongst friends and family anywhere you go, and it appears that so far Mr. Sunak’s strategy in stimulating the economy is working.
