The fast-moving COVID-19 pandemic has shown those working in the residential property market that the sector is more resilient than any of us could have ever anticipated. This is despite the unsettled global economy, continuous lockdowns and social distancing measures. In this article, Private Property solicitor Sakhjit Randhawa discusses how the prime residential property market has changed over the past year and what we can expect in the future.
The purchase and sale of prime residential property in 2020
At the start of 2020, the COVID-19 outbreak and the subsequent shutdown period caused a lack of activity in the market. In the early days of the pandemic there was a 7-week period of inactivity as restrictions on viewings and movement took hold, homeowners were for a short while reluctant to buy or sell whilst they came to terms with what was happening with the global health emergency and as strict work-from-home rules were imposed.
However, according to Savills, the UK prime residential property market (broadly the top 5% to 10% of the market by value) then saw an exceptional level of activity once UK lockdown number one was lifted in May 2020 and estate agents were permitted to conduct viewings again. By October 2020, £20 billion of monthly mortgage approvals were being seen as demand for new homes increased, with buyers and sellers re-evaluating their housing and lifestyle needs and making the decision to move.
With government advice to ‘Stay Home’ and the periods in and out of lockdown our homes took on a new level of significance. For many, life has changed for a period in a fundamental way, as day-to-day routines have had to take place within the four walls of our homes. Homes have always provided us with a foundation, but for many they have for a period become our offices, schools, the pub, and a safe shelter away from the pandemic.
Predictions for the future of the UK property market in 2021
The repeated lockdowns have for many highlighted the importance of space for physical and mental wellbeing. Savills have predicted that properties with space to work and relax will continue to be in greater demand even post-pandemic, while Rightmove UK report a significant rise in a number of people searching for homes further from towns and city centres, with large gardens and entertaining spaces. With many working remotely during the pandemic, the Savills ‘Sentiment Survey’ indicated that 90% of research heads expect demand for home offices to increase, while 86% expect an increase in demand for high-speed internet. With more time spent at home than ever before, many homeowners are reassessing their priorities with previous home attributes such as an easy commute to work being less relevant.
The pandemic has led to an inevitable technological surge across many industries, adapting to new technology and becoming better prepared to deal with clients from any location. Previously, property buyers invariably wished to see a home in person (and many still do) but estate agents are now offering buyers a virtual viewing experience, using video technology to weed out options before conducting a more limited number of physical viewings. There has also been an increase in electronic signing software to deal with documents that cannot be signed by hand in line with COVID-19 guidelines. With all these changes to the technological side of the conveyancing process, it has become ever more important for clients to hire lawyers with the technology in place to work efficiently and seamlessly.
Demand for prime central London properties
Recent reports of an exodus from and the demise of London as a globally attractive destination of choice are premature. Knight Frank, Savills, and Beauchamp Estates all predict a substantial uptick in high-net-worth international investment in the second half of 2021 into best-in-class London residential houses and apartments as travel restrictions ease, vaccination programmes take effect, sterling remains subdued against the US dollar and pent-up demand from buyers in The Far East, Gulf States and USA that has been held back by difficulties in international travel is released. Knight Frank forecast a 5% increase in prime central London prices in 2021 with prime London expected to outperform the wider UK property market over the next 5 years.
Advice for those looking to purchase or sell a prime property
With all these changes in the prime residential property market, it is more important than ever for buyers and sellers to have a good team of professionals on hand to act. Swift, competent, thorough and pragmatic legal advice is critical to the commercial success or failure of a prime residential property transaction.
Buyers should instruct solicitors early, so they can complete the client onboarding process and pass all necessary compliance and anti-money laundering checks before they even start bidding for a property. Dealing with these checks after a deal is agreed can hinder speedy progress and run the risk of a well-prepared competing purchaser making themselves the winning bidder on a desirable property. Buyers should also speak to their solicitors to work out early the best way to tax-efficiently structure their purchase. This is especially important for international buyers of super-prime properties where tax liabilities can be many millions of pounds.
For sellers, advance preparation on the legal side before a property even goes on the market offers a huge head start. Putting together search results, preparing a full pack of title documents and dealing with replies to enquiries can speed the process up and ensure a successful sale when a deal is then struck. Early planning with your solicitor can ensure success and avoid frustrating your buyer in what can otherwise be a slow-moving English property law system.
Whether you are planning to buy, sell or develop, Keystone has a market-leading team of expert prime property lawyers ready to assist with world-class service and easy accessibility. For guidance on the sale or purchase of a prime residential property, please get in touch with Sakhjit Randhawa.
This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.