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2018 - a year in property in the UK

  1. 27 December 2018
  2. By Andi Michael

We have a look over the last year from a property perspective, looking at everything from the impact of Brexit uncertainty to the extension of Help to Buy.

While politics has definitely been grabbing the attention and hogging the headlines in the last 12 months, 2018 saw the property world take a bit more of a backseat.

There’s still been plenty going on and plenty that we all need to be aware of, though, which is why we’ve put together the below lowdown on what’s happened in the UK property market this year.

The extension of Help to Buy

Rumours abounded before this year’s Budget, held earlier than usual in October to facilitate the government’s negotiations on Brexit, that the Help to Buy equity scheme was set to be scrapped. In reality, its end date was extended to 2023 from a previously planned finish date of April 2021.

From 2021, though, the scheme will only apply to first-time buyers and new regional price caps will be introduced. For example, only houses with a market value of up to £186,100 in the North East would be applicable for Help to Buy, stretching up to £600,000 in London.

In 2023, the scheme will be scrapped altogether. Help to Buy aims to offer a helping hand to struggling buyers by offering loans (interest-free for five years) of up to 20% of a property’s value to people with a 5% deposit. Buyers then take out a mortgage for the remaining 75% from a participating mortgage lender. In London the upper limit for the equity loan is 40%, to reflect the higher property prices at play in the capital.

We’ve previously looked at some of the Help to Buy’s issues – such as people paying more for their new-build homes than they would otherwise and the problems faced by early adopters of the scheme – and whether it’s helping or harming the market.

Brexit uncertainty dampens market

It might be less than 100 days until the UK’s proposed departure from the European Union (29 March 2019), but as of now there is still no withdrawal agreement on the table and the only current certainty is continued uncertainty.

The vote on Theresa May’s Brexit plan has been delayed until the New Year (set for the week starting January 14), but there are still very significant doubts over her ability to get it through the House of Commons.

Talk of a no deal Brexit has been growing again – we looked previously at what impact a hard, clean Brexit might have on the property market – but there are those who suggest that Parliament won’t allow such a deal. And the parliamentary arithmetic seems to suggest a no deal Brexit, with all the possible issues and consequences that could cause, is not actually a realistic option on the table.

Meanwhile, calls for a second referendum have also been growing louder in recent weeks, with high-profile MPs from all sides of the political divide backing this course of action.

Inevitably, all this uncertainty has had an impact on the property market. Recent research by the Royal Institution of Chartered Surveyors (RICS) suggests Brexit is ‘taking its toll’ on the UK housing market, with buyers and seller both electing to sit tight.

RICS said its monthly indicators for demand, supply and prices fell to multiyear lows in November, with the number of people looking to purchase a home falling again (the net balance of -21% was the lowest since September 2017).

The number of new homes being put up for sale also fell for the fifth successive month, while the number of agreed sales plummeted in November – down to -15% from -10% - with activity declining nearly everywhere in the UK. 

Simon Rubinsohn, chief economist at RICS, commented: “Caution is visible among both buyers and vendors and where deals are being done they are taking longer to get over the line. The forward-looking indicators reflect the suspicion that the political machinations are unlikely to be resolved anytime soon.”

The same organisation has also predicted more ‘Brexit gloom’ for the housing market in 2019, with stagnating house prices, fewer homes being sold and a longer wait to complete on sales.
While some would argue the property market has coped remarkably well since the result of the referendum was revealed more than two years ago, all the latest indicators suggest a more difficult period ahead. Certainty over Brexit, however, would definitely help to bring some more normality, stability and confidence to the sector.

New rules and regulation

The last year was a busy one for new legislation – with new energy efficiency standards introduced in April, changes to Section 21 notices and HMO licensing in October and, most recently, the Homes (Fitness for Human Habitation) Bill receiving Royal Assent.

There has also been movement on the controversial plan to ban upfront fees to tenants – the Tenant Fees Bill is making slow but steady progress through Parliament – talk of professionalising the estate agency sector to drive up standards, proposals to reform the leasehold sector, consultations on a range of topics, two new Housing Ministers, a rebranding of a government department to emphasise the important of housing and a Budget which was described as lacklustre from a property perspective.

Stamp duty success and alternative mortgages

Following the government’s decision to scrap stamp duty for most first-time buyers in November 2017, more than 180,000 purchasers have benefitted from the tax relief, according to figures released by HM Revenue & Customs earlier this year. In total, this means first-time buyers have saved an estimated £426 million.

What’s more, in this year’s Budget, Philip Hammond announced that the stamp duty relief was being extended to first-time buyers of shared ownership properties. This measure was also backdated, which means that anyone who purchased a shared ownership home since 22 November 2017 will be recompensed for the stamp duty they paid.

2018 was also a year in which the Family Link mortgage was launched by Post Office Money to try and aid struggling first-time buyers. As we outlined in this blog, it was another way for the Bank of Mum and Dad to support their offspring’s first steps on the property ladder without having to hand over a lump sum deposit.

This, of course, is only a snapshot of a busy, eventful 2018, which seems to have shown both the strengths and the vulnerabilities of the UK housing market.

Next year could really be a game-changer, with the position on Brexit hopefully becoming clearer, probable confirmation of the tenant fees ban and further steps by the government to increase housebuilding and opportunities for first-time buyers.

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