Home repossessions set to be put on hold until April
Calls to extend the ban on home repossessions come after a third national lockdown was introduced earlier this month.
Home repossessions are set to be put on hold until April following the introduction of new lockdown measures across the UK.
Regulator the Financial Conduct Authority (FCA) has proposed lenders should not act on repossession orders and take back people’s homes until at least 1 April.
The moratorium on repossessions would apply to both homeowners and landlords of buy-to-let properties.
While the proposal has been put out to consultation until 18 January, it has already received the support of trade body UK Finance, which represents mortgage lenders.
Eric Leenders, managing director of personal finance at UK Finance, said: “The banking and finance industry is committed to providing ongoing support to those facing financial difficulty as a result of the pandemic.
“The industry is fully supportive of a moratorium on possessions remaining in place until 1 April 2021 to ensure customers do not lose their home at this difficult time.”
Why is this happening?
The FCA had previously called for lenders not to enforce repossession orders before 31 January, except in exceptional circumstances.
It is proposing extending this guidance until 1 April due to the worsening coronavirus situation in the UK and the government’s new lockdown measures.
It said the latter meant people could experience significant harm if they were forced to move because their home was repossessed.
What support is available?
Mortgage lenders have introduced a range of support measures to help homeowners and landlords whose finances have been impacted by the pandemic.
The option of taking a mortgage payment holiday, under which people can defer making their monthly repayments for up to six months, has been extended until 31 July, although consumers will have to apply by 31 January if they want a full six-month deferral.
For borrowers who have already taken a six-month payment holiday, lenders are offering tailored support, including accepting reduced payments for a period of time, switching them to an interest-only mortgage or extending their mortgage term.
More than 2.7 million mortgage payment holidays have been arranged since the scheme was first launched last March, with around 127,000 deferrals in place in mid-November 2020.
What should I do if I can’t pay my mortgage?
If you are struggling to keep up with your mortgage payments it is important to contact your lender as soon as possible, as you will have fewer options if you are already in arrears.
If you want to take out a mortgage payment holiday, follow the instructions on your lender’s website, as many lenders have set up an online application process.
If you want to request a different option, such as switching to an interest-only mortgage, you should contact your lender directly.
What’s the background?
The proposal to put repossessions on hold until April follows a similar move to ban tenant evictions until at least 21 February 2021 in England, and 31 March in Scotland and Wales.
The only exception to the ban is for evictions due to anti-social behaviour, illegal occupation, fraud or rent arrears.
Landlords are also required to give their tenants a six-month notice period if they want to evict them until at least 31 March.
Top three takeaways
- Repossessions are set to be put on hold until April following the introduction of new lockdown measures across the UK
- While the proposal from the FCA has been put out to consultation until 18 January, it has already received the support of trade body UK Finance
- The moratorium on repossessions would apply to both homeowners and landlords of buy-to-let properties
Lockdown 2021: ban on tenant evictions extended until February
The government has extended the ban on bailiff evictions for a further six weeks.
Tenants in England are being protected from eviction for at least a further six weeks.
The government is extending the ban on bailiff evictions for all but the most extreme cases until at least 21 February 2021.
The only exception to the ban is for evictions due to anti-social behaviour, illegal occupation, fraud or rent arrears of more than six months, as well as cases of domestic abuse in the social sector.
Communities secretary Robert Jenrick said the measures would be kept under review, and landlords would be required to give a six-month notice period to tenants until at least 31 March.
A pilot scheme is also being launched in February to offer mediation between landlords and tenants facing court proceedings for eviction to try to help the two parties reach a mutual agreement that keeps people in their homes.
What’s the background?
The government first introduced a ban on tenant evictions in England in March last year. Court eviction hearings were also put on hold.
The ban ended in September, but a new grace period was introduced between 11 December and 11 January in England and Wales to ensure no-one was evicted during the festive period.
Evictions were 86% lower between July and September 2020 than they had been in the same period of the previous year, while no repossessions were recorded between April and the end of September, down from 14,847 a year earlier.
Who does the new agreement affect?
England
Under the latest extension of the ban, tenants in England cannot be evicted until after 21 February, although the government said in reality, it did not expect any evictions until 8 March at the earliest.
Landlords will also have to give their tenants at least six months’ notice if they are being evicted before 31 March.
Wales
Tenants in Wales have been given even more breathing space, with the ban on evictions extended until the end of March.
Evictions will still go ahead, however, in cases of anti-social behaviour or domestic violence.
Scotland
The latest ban on evictions does not impact tenants in Scotland as they are already protected under separate legislation.
In September, Nicola Sturgeon’s government extended its coronavirus-related eviction ban until March 2021.
What are my rights as a tenant?
It is illegal for a landlord to evict you without giving you written notice or obtaining a court order.
If you are in an assured shorthold tenancy, the most common type of tenancy, they can start the eviction procedure through giving you either a section 21 or section 8 notice.
Your landlord does not need to give a reason to evict you under a section 21 notice, but they must give you a warning period, which is currently of six months, and you cannot be issued with a section 21 notice during the first four months of your original contract.
If you do not leave the property at the end of this period, your landlord must go to court to evict you legally.
Landlords can only issue a section 8 notice if they have legal grounds to end your tenancy, for example if you are in rent arrears. They must apply to a court for a possession order to evict you.
A landlord is not allowed to harass you or lock you out of your home, even temporarily, while they are waiting to evict you.
For more on your rights as a renter, read our guide here.
What should I do if I can’t pay my rent?
If you are struggling to pay your rent, it is important to talk to your landlord as soon as possible.
If you can still afford to pay some of your rent, ask your landlord if they would accept a reduced payment for a period of time, particularly if you think you will be able to make up the shortfall once your finances have recovered.
It is also be worth checking to see if there are any government benefits available to you.
The government has made £180m available for Discretionary Housing Payments which councils can distribute to support renters who need help with their housing costs.
Top three takeaways
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Tenants in England will be protected from eviction for at least a further six weeks
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Similar measures have been announced in Scotland and Wales
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People struggling to pay their rent are advised to talk to their landlord as soon as possible and check whether they are eligible for any benefits
Overhaul of leasehold system could save homeowners thousands of pounds
The government is reforming the system to make it easier and cheaper for leaseholders to extend their leases.
Millions of homeowners with leasehold properties will be given a new right to extend their lease in a major shake-up that could see some households save tens of thousands of pounds.
Housing secretary Robert Jenrick has announced that people with leasehold homes in England will be given the right to extend their lease by up to 990 years at zero ground rent.
He said that the measures come as "part of the biggest reforms to English property law for 40 years, fundamentally making home ownership fairer and more secure".
Unlike a freehold property, people with a leasehold property do not own their home outright, but only have the right to live there for a set period of time, with leases typically running for between 99 and 125 years. The land on which a leasehold property sits is owned by a freeholder.
Homeowners can extend their leasehold or even buy their freehold, but the process can be complicated and expensive.
Leaseholders also have to pay annual rent – known as ground rent – to the freeholder.
Under the current law, many leaseholders face high ground rents, which the owner of the land can increase without having to provide any justification.
Why is this happening?
An estimated 4.5 million homeowners have a leasehold property.
In the past, leasehold properties tended to be restricted to flats, but there has been a growing trend among developers to sell houses on a leasehold basis as well.
A report on the issue by the Housing, Communities and Local Government Committee warned that in some cases ground rents had doubled every 10 to 15 years.
At the same time, issues relating to leases can also lengthen the time taken to buy or sell a property and increase the costs involved.
Mark Hayward, chief policy adviser at Propertymark, said: “The issue of escalating ground rent on leasehold homes has been a long-term scandal which has left many owners trapped and unable to sell their houses.
“This new legislation will go a long way to help thousands of homeowners caught in a leasehold trap.”
What’s changing?
Under current rules, leaseholders of houses can only extend their lease once for 50 years with a ground rent.
Leaseholders of flats can extend as often as they want at zero, or so-called peppercorn, ground rent for 90 years.
The new changes will mean that both leaseholders of flats and houses will be able to extend the lease on their home to a new standard term of 990 years and no longer pay any ground rent.
The government estimates the overhaul could save leaseholders thousands, and even tens of thousands, of pounds.
A Commonhold Council will also be set up to prepare homeowners and the market for the widespread take-up of commonhold as an alternative to leasehold.
A commonhold model allows homeowners to own their property on a freehold basis, with blocks of flats jointly owned and managed.
What else is happening?
An online calculator will be introduced to make it simpler for leaseholders to find out how much it will cost them to buy their freehold or extend their lease.
The government is also abolishing certain other costs associated with buying a freehold or extending a lease, while it will set the calculation rates in a bid to ensure the process is fairer, cheaper and more transparent.
It has previously been announced that ground rents on new leases on homes will be restricted to zero.
This rule will now be extended to apply to all new retirement properties.
The legislation will be brought forward in two parts. The first part, which will set future ground rents to zero, will be introduced in the upcoming session of Parliament, with the other changes, such as those relating to commonhold, brought forward in due course.
Top three takeaways
- Millions of homeowners with leasehold properties will be given a new right to extend their lease by up to 990 years
- Changes could see some households save tens of thousands of pounds
- All new retirement homes will also be sold without a ground rent
Housing market to stay open in January lockdown
People can continue to view properties and move home despite the latest lockdown measures.
The Prime Minister has announced a new national lockdown in England in a bid to control soaring coronavirus cases.
People are only allowed to leave home for limited reasons, while non-essential shops and schools must close. Similar measures have been introduced in Scotland and Northern Ireland.
The housing market will remain open, and people can continue to buy, sell, rent or let properties, as long as government guidelines are followed.
Mark Hayward, chief policy advisor at industry body Propertymark, said: “We welcome the news that the housing market is to remain open throughout this new lockdown period, but it is essential that all agents continue to play their part in reducing the spread of the virus by following all relevant guidance on how to safely conduct viewings.”
Experts suggest the new restrictions are expected to remain in place until the middle of February and will only be lifted if the pressure on hospitals improves.
Will the housing market stay open in lockdown?
Yes, the housing market will remain open. Viewing a property or moving home has been classed as one of the limited exceptions under which people are allowed to leave their home under the new guidance.
Other services required for the home buying, selling and moving process, such as solicitors, valuers, surveyors and removals firms, can also continue to operate.
But it is important to note that social distancing measures must be observed when viewing properties or moving home.
Will estate agents stay open in lockdown?
Estate agents and letting agents will remain open but members of the public will have to follow certain rules if they want to visit their offices.
For example, you may be required to make an appointment and you must wear a suitable face covering during the visit.
If you want to list your property for sale or rent, agents can still visit your home to take photographs and measurements, but social distancing measures must be followed, such as wearing a suitable face covering, keeping internal doors open and staying two metres away from people who are not part of your household.
If you or any member of your household is showing symptoms of Covid-19 or are self-isolating, estate agents and potential buyers should not visit your property in person.
Can I still view properties during lockdown?
If you are looking to buy or rent a new home, you can continue to view properties, as long as social distancing measures are followed, including wearing a suitable face covering.
Viewings can only be done by appointment and ‘open house’ viewings are not allowed.
You should wash your hands regularly or use hand sanitiser and avoid touching surfaces wherever possible. If you can, it is better not to bring children with you.
All internal doors of the property being viewed should be left open, and surfaces, such as door handles, should be cleaned after each viewing. Windows should be kept open to ensure maximum ventilation.
It is also recommended that property owners wait outside while viewings are taking place to minimise unnecessary contact.
Many estate agents will be offering online or virtual viewings in the first instance and it is recommended that people only view a property in person if they are seriously considering making an offer on it.
Similar measures apply to the viewing of show homes.
What does the new lockdown mean if I am moving home?
Home moves are allowed to go ahead but people outside of your household or support bubble should not help with the move.
Removal firms can continue to work during the latest lockdown, however, social distancing measures must be observed to help keep everyone safe.
These measures include doing as much packing as you can yourself, cleaning your belongings before removals workers arrive, keeping internal doors open and ensuring a distance of two metres is kept between you and the removers where possible.
Everyone should wash their hands regularly or use hand sanitiser and avoid touching surfaces.
You should not provide refreshments for removers, but should ensure they have access to handwashing facilities, as well as separate towels or paper towels on which to dry their hands.
You are allowed to spend a night in a hotel or other similar accommodation while you are in the process of moving home if necessary.
The government has asked people to be as flexible as possible and be prepared to delay moves if someone involved in the process needs to self-isolate or if someone in the property you are moving into has Covid-19.
Top three takeaways for moving house during lockdown:
- You can still move home. People outside your household or support bubble should not help with moving house unless absolutely necessary.
- Estate and letting agents and removals firms can continue to work. If you are looking to move, you can go to property viewings.
- Follow the national guidance on moving home safely, which includes advice on social distancing, letting fresh air in, and wearing a face coverings.
Homeownership rate falls among young people
The past decade has seen a drop in the number of people aged under 45 who live in their own home, according to the English Housing Survey.
The proportion of people aged under 45 who own their own home has fallen by more than 10% during the past decade.
Only 56% of people aged between 35 and 44 in England were owner-occupiers in 2019-2020, down from 67% 10 years earlier, according to the government’s English Housing Survey.
Younger age groups were even less likely to own a property, with only 41% of those aged between 25 and 34 living in their own home.
The drop in homeownership among younger people comes despite a raft of schemes being launched by the government in recent years to help people get on to the property ladder.
Instead, 42% of people aged between 25 and 34, and 27% of those in the 35 and 44 age group lived in the private rented sector, up from just 17% 10 years ago.
Why is this happening?
The fall in the number of younger homeowners during the past decade is likely to have been driven by changes to the mortgage market.
The majority of mortgages for people with small deposits were withdrawn during the financial crisis and were slow to be reintroduced.
At the same time, new affordability rules also made it harder for younger people on lower salaries to qualify for a mortgage.
Meanwhile, house price growth has outstripped increases to average earnings during much of the past decade, leading to increasingly stretched affordability.
Who does it affect?
Affordability constraints were reflected in the fact that only 19% of people who bought their first home last year did so on their own, with couples accounting for the majority of those who got on to the property ladder.
First-time buyers put down an average deposit of £42,433, while 62% of those buying their first home in 2019-20 had an income that put them in the top 40% of earners nationally.
Despite this fact, just under half of first-time buyers opted for a mortgage repayment term of 30 years or more, with only 4% having a term of 19 years or less.
What’s the background?
Despite the high deposits first-time buyers put down to get on to the property ladder, there was a fall in the level of support they received from the ‘bank of mum and dad’.
Around 85% of people used their own savings to fund their home purchase in 2019-20, up from 76% in 2017-18.
By contrast, only 28% received financial help from family or friends, down from 39% two years earlier.
A further 6% said they used money they had inherited for their deposit.
Top three takeaways
- The proportion of people aged under 45 who own their own home has fallen during the past decade
- Only 56% of people aged between 35 and 44 were owner-occupiers in 2019-2020, down from 67% 10 years earlier
- The drop comes despite a raft of schemes being launched by the government in recent years to help people get on to the property ladder.
Mortgage approvals reach highest levels since 2007
The scramble for property continues as buyers rush to take advantage of the stamp duty holiday.
Mortgage approvals soared to a new 13-year high in November as the property market showed no signs of slowing down.
A total of 105,000 mortgages were agreed for people purchasing a home, the highest level since August 2007, according to the Bank of England.
Approvals were up from 98,300 in October (also a 13-year high) and broke through the 100,000 barrier for the first time in 13 years.
The increase comes as lenders continue to expand on the number of mortgages available for first-time buyers.
There are currently 160 different deals available for people with a 10% deposit, up from a low of 51 in October last year, but still significantly below the 762 that were available in January 2020, according to the latest figures from Moneyfacts.
Why is this happening?
The buoyant mortgage approval figures suggest the mini boom in the housing market still has further to run.
The high level of transactions has been sparked by a combination of the stamp duty holiday on homes costing up to £500,000, alongside people re-evaluating their housing needs following lockdowns and periods of working from home.
Meanwhile, the rise in mortgage products for buyers with small deposits indicates lenders are feeling less risk-averse than they were in the early days of the coronavirus pandemic, when many of these deals were taken off the market.
Who does it affect?
The increase in mortgages for people borrowing 90% of their home’s value is good news for first-time buyers. But while the availability of these mortgages has increased, there are still very few options for people with only a 5% deposit, with just eight different 95% mortgages currently available.
Although product choice for people with a 10% deposit has increased, the cost of the deals remains significantly higher than this time last year. The average interest rate is now 3.65% for a two-year fixed rate mortgage, compared with 2.59% a year earlier, despite the Bank of England base rate falling by 0.65% during the period.
Mortgage rates are even higher for people with just a 5% deposit, averaging 4.44% on a two-year fixed rate loan, up from 3.25% in January 2020.
What’s the background?
Our data suggests the current mini housing market boom still has further to run.
Buyer demand was 33% higher in December than it was in the same month of 2019, according to our latest House Price Index.
Meanwhile, a record Boxing Day bounce saw traffic on our property search portal surge by 70.5%, considerably higher than the 61% jump seen a year earlier.
But the market is expected to start slowing down in the second quarter of this year once the stamp duty holiday ends on March 31 and unemployment rises as government support measures are withdrawn.
Top three takeaways
- Mortgage approvals for house purchases soared to a new 13-year high in November as the property market showed no signs of slowing down
- A total of 105,000 mortgages were agreed for people purchasing a property, the highest level since August 2007
- The number of mortgages available to people with a 10% deposit has increased to 160 from a low of 51 in October last year
Government rules out stamp duty holiday extension in 2021
With the stamp duty holiday due to end on 31 March 2021, the government has reacted to calls for an extension. What it means if you’re planning to buy or sell a home next year.
The government has responded to calls for an extension to the stamp duty holiday by stating it has no intention to extend the tax relief.
The stamp duty holiday is due to come to an end on 31 March 2021, despite repeated industry calls for an extension and a petition to parliament with more than 28,000 signatories.
Responding to the petition, the government said: “As the relief was to provide an immediate stimulus to the property market, the government does not plan to extend this relief.
“Stamp duty is an important source of government revenue, raising several billion pounds each year to help pay for the essential services the government provides.”
What’s the background?
The stamp duty holiday was introduced in July 2020 by Chancellor Rishi Sunak in a bid to boost the housing market in England and Northern Ireland during the coronavirus pandemic.
Under normal circumstances, buyers pay stamp duty land tax when buying a property worth £125,000 or more, although first-time buyers only have to pay it on homes above £300,000.
The introduction of the stamp duty holiday raised the threshold at which the tax kicks in to £500,000 for all buyers, amounting to a potential saving of up to £15,000.
Can I still buy before the stamp duty holiday ends?
Yes, but you’ll need to move fast. The time it takes between agreeing a sale and completing is normally just under 100 days.
Our research shows that only 54% of sales agreed in January will complete in time, with that figure dropping to 17% in February.
From getting your paperwork lined up in advance, to smoothing out any wrinkles that may disrupt your property chain, here are our top tips to help you beat the deadline.
What happens when the stamp duty holiday ends?
Once the stamp duty holiday ends on 31 March next year, the former stamp duty rules will apply.
This means buyers can be charged between 2% and 12% tax (or up to 17% if they are a foreign investor) on their property purchase, depending on the value of the home they are buying and if they own more than one property.
“The government is committed to supporting home ownership and helping people get on and move up the housing ladder,” it said.
“When the stamp duty holiday ends, the government will maintain a stamp duty relief for first-time buyers which increases the starting threshold of residential stamp duty to £300,000 for first-time buyers that purchase a property below £500,000."
How much stamp duty will I pay after 31 March 2021?
Stamp duty is calculated as a percentage of the property you are buying. It applies to freehold and leasehold properties, whether you’re buying outright or with a mortgage.
For existing homeowners, the rates are:
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0% up to £125,000
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2% on £125,001-£250,000
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5% on £250,001-£925,000
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10% on £925,001-£1.5m
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12% on any value above £1.5m.
For example, if you buy a flat for £275,000, the stamp duty you owe would be:
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0% on the first £125,000 = £0
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2% on the next £125,000 = £2,500
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5% on the final £25,000 = £1,250
Total stamp duty = £3,750
First-time buyers after 31 March 2021
Stamp duty relief was introduced in November 2017 for first-time buyers to help people step onto the property ladder.
First-time buyers are exempt from stamp duty on properties costing up to £300,000 and pay 5% on the value of a property between £300,000 and £500,000.
A first-time buyer will pay:
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0% on the first £300,000
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5% on the remainder up to £500,000
So a first-time buyer purchasing a £275,000 flat would pay no stamp duty.
For a house costing £475,000, a first-time buyer would pay:
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0% on the first £300,000 = £0
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5% on the final £175,000 = £8,750
Total stamp duty = £8,750
However, if the purchase price is more than £500,000, first-time buyers cannot claim the relief and must pay the standard rates.
For example, a property purchased at £700,000 would result in a stamp duty bill totalling £25,000 even for a first-time buyer.
Landlords and second-home owners
For owners of more than one property, a surcharge of 3% on top of the standard stamp duty rates apply.
However, if you sell a home within three years of purchasing a second property, you can apply for a refund of that 3%.
It is also possible under some circumstances to claim multiple dwellings relief.
What about non-UK residents?
From April 2021, an additional 2% stamp duty levy will be imposed on non-UK residents who buy property in England and Northern Ireland.
It means that international buyers of second homes could pay up to 17% tax on expensive properties.
The 2% is on top of standard rates and in addition to the 3% surcharge for any investors who own property elsewhere.
What other government support is available?
During the second lockdown, the government extended its offer of mortgage payment holidays. Those who need help paying their mortgages can still request a holiday of up to six months until 31 March 2021.
To help first-time buyers get on the property ladder, the government's Help to Buy scheme offers an equity loan of up to 20% of the property value (40% in London). As long as you can raise a 5% deposit, you can then apply for a standard mortgage to pay the remaining amount.
At the Conservative party conference in October, Prime Minister Boris Johnson pledged to “turn generation rent into generation buy” and announced plans for a new scheme to give more people the chance to take out long-term fixed rate mortgages for up to 95% of their home’s value - although details have not yet been released.
What about stamp duty in Scotland and Wales?
Housing is a devolved issue in Britain so stamp duty only applies in England and Northern Ireland.
Scotland and Wales have equivalent taxes:
Scotland
From April 2015, Stamp Duty was replaced by Land and Buildings Transaction Tax (LBTT) in Scotland.
In Scotland, the LBTT rates are:
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0% up to £145,000
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2% on £145,001-£250,000
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5% on £250,001-£325,000
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10% on £325,001-£750,000
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12% on any value above £750,000
First-time buyers pay no LBTT up to £175,000.
Wales
Property owners in Wales have paid Land Transaction Tax (LTT) since April 2018.
LTT rates are:
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0% up to £180,000
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3.5% on £180,001-£250,000
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5% on £250,001-£400,000
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7.5% on £400,001-£750,000
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10% on £750,001-£1.5 million
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12% on any value above £1.5 million
In December, the Welsh government introduced an additional charge for second-home owners.
Second home-owners will now pay a 4% levy when they buy homes up to £180,000, rising to 16% for homes worth £1.6m or above.
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Buyer demand soars by 40% in 2020
As the rollercoaster year draws to a close, the total value of homes changing hands in 2020 is 26% higher than in 2019, according to our House Price Index.
The total value of homes changing hands is set to jump by £62bn in 2020 as buyer demand soars by 40%.
Sales have been agreed on more than £300bn worth of property this year, that's 26% higher than in 2019, as successive lockdowns have caused people to re-evaluate their housing needs.
The high levels of buyer demand, combined with a shortage of homes for sale, has pushed annual house price growth up to a three-year high of 3.9%.
The jump leaves the average home costing £222,900, according to our latest House Price Index.
What’s happening to house prices?
UK house price growth has increased to 3.9%, its highest level since August 2017, and up from 1.3% a year ago.
The impetus for the growth is coming from northern England and Wales, where property remains more affordable.
On a city level, Manchester led the way, with property values rising by 5.7% during the past year, closely followed by Leeds at 5.6%, Nottingham at 5.4% and Liverpool at 5.3%.
All cities monitored by our House Price Index recorded annual gains apart from Aberdeen, where prices dropped by 2.6%.
Regionally, the north west recorded the strongest growth, with average house prices increasing by 5% year-on-year, followed by Wales and Yorkshire and the Humber, both at 4.9%.
Is buyer demand still strong?
The housing market looks set to end the year on a strong note, with buyer demand currently 33% higher than it was in December 2019, as the market defies the traditional seasonal slowdown.
The pandemic has driven a ‘seismic’ search for space and quality location. And demand for family housing with gardens, parking and extra space to work from has continued to rise.
Despite the shutdown of the housing market earlier this year, the ‘once-in-a-lifetime’ reassessment of property has seen buyer numbers soar by 40% across the whole of 2020, compared with the previous year.
What’s happening with property sales?
The strong levels of demand are proving to be committed, rather than speculative, and are converting readily into sales agreed.
Sales levels have jumped by 9% during 2020, compared with 2019, although with transactions taking three to four months to complete, a portion of these will spill over into 2021.
The rebound in sales has been strongest in the south east and eastern England, where they are more than 20% higher than in 2019.
But the strong demand has not been matched by an equal rise in new listings, with the number of properties for sale increasing by only 4%, creating a mismatch between supply and demand and putting upward pressure on prices.
What’s next for the housing market?
Housing market activity remains well above normal levels for this time of year, and this momentum is expected to lead to a strong start in 2021.
Looking ahead, our research and insight team expects annual house price growth to reach 5% in February, before slowing to 1% by the end of 2021, as demand starts to weaken during the second half of the year.
Buoyed by the strong start to the year, the number of completed property transactions is likely to be broadly similar to this year at 1.1 million.
Richard Donnell, director of research and insight at Zoopla, said: “The ‘once-in-a-lifetime re-assessment of housing’ kickstarted by the pandemic has further to run in our view and this will support demand into 2021.
“With a long Christmas weekend, and many households isolating in smaller groups, we expect interest in housing to be stronger than usual ahead of the traditional Boxing Day bounce, when interest in housing jumps.”
But Donnell warned that while market activity is being boosted by latent demand unlocked by the pandemic, the housing market is not immune to economic forces and rising unemployment.
He added: “Economic pressures are already impacting in parts of the market, reducing the volume and share of sales in less wealthy areas, for example.”
Four tier Covid-19 restrictions: what does it mean if I want to move home?
We give you a list of regions in full and explain what impact the government's tiered system could have if you’re looking for a new property.
England is now under four tiers of coronavirus restrictions, with London and parts of the south east having been placed in the highest tier by Prime Minister Boris Johnson.
The good news is that under the government’s new advice, the housing market remains open for business, whether you’re buying, selling, renting or letting.
Housing secretary Robert Jenrick has confirmed via Twitter that renters and homeowners in England will be able to move and removal firms, tradespeople, and estate agents can still operate in all tiers, including tier four.
“Housing market update: the sales and rental markets remain open in all tiers. All associated activities can continue as before," writes Jenrick.
“Please follow the Covid secure guidance. And use your judgment as to whether it’s necessary right now.”
Across the board, estate agents remain open and physical property viewings are allowed, with comprehensive advice on how to follow social distancing guidelines inside homes.
Others in the housing market, such as conveyancers, tradespeople, and professional movers, can continue to operate, too.
What the different tiers mean and which regions are in them:
ier 1 - medium alert
In tier one areas, all businesses and venues can continue to operate in a Covid-secure way, other than those that are currently closed by law, such as nightclubs.
Schools, universities and places of worship can remain open, and indoor sport and exercise classes can continue to take place. People must not meet in groups of more than six either indoors or outdoors, other than where a legal exemption applies, such as for a wedding or funeral
Find full details and the latest government guidance here.
What does tier 1 mean for the property market?
Tier one essentially means business as usual for the property market, but with as many safety restrictions in place as possible.
Can I view properties in a tier 1 area?
Yes.
Property viewings can continue to happen with Covid-secure measures in place.
Such measures include the wearing of face coverings, regular hand washing, keeping doors and windows open for good ventilation during the viewing, and only two prospective buyers from the same household entering the property at a time.
Sellers and estate agents may choose to wait outside the property or decide not to be present while viewings are undertaken.
Open house viewings are not allowed at this time.
If any member of either the household whose home is being viewed, or of the household viewing the property, shows symptoms of Covid-19 or is self-isolating, then an in-person viewing should be delayed.
The government is encouraging the use of virtual viewings before visiting properties in person in order to minimise public health risks.
Are estate agents in tier 1 open?
Yes.
However, the toughened tier system means more people are being encouraged to work from home where possible under tier one.
This might mean some agents may choose to work from home, continuing to work digitally and remaining open at branch-level by appointment only.
Can I move house under tier 1?
Yes.
Estate and lettings agents, removers, valuers and people in sales and lettings offices and show homes can continue to work under the tiered system as they did during the most recent national lockdown.
Meeting with people outside your household or bubble “to facilitate moving home” is listed as one of the government’s exemptions from gatherings limits across all tiers.
Advice from the government encourages everyone involved in a home move to be as flexible as possible and to be prepared to delay moves if, for example, one of those involved becomes ill with Covid-19 or has to self-isolate.
Which English regions are in tier 1?
South east
- Isle of Wight
South west
- Cornwall
- Isles of Scilly
Midlands
- Herefordshire (from midnight on Saturday 19 December)
Tier 2 - high alert
Tier two is for areas with a higher or rapidly rising level of Covid-19 infections.
Anyone living in a tier two area must follow all of the tier one rules, and also not meet with anybody outside of their household or support bubble in any indoor setting, including their home or a public building.
Meetings of up to six people from outside the same household or bubble can take place outside in public spaces and gardens.
Find full details and the latest government guidance here.
What does tier 2 mean for the property market?
Under tier two, the majority of businesses can continue to operate as usual and this includes estate agents and other services related to moving house, such as conveyancers and removers.
Can I view properties in a tier 2 area?
Yes.
In-person property viewings can still take place, with appropriate precautions.
The same advice applies to tier two property viewings as it does in tier one.
This means property viewings can continue to take place with Covid-secure measures in place.
Such measures include the wearing of face coverings, regular hand washing, keeping doors and windows open for good ventilation during the viewing, and only two prospective buyers from the same household entering the property at a time.
Sellers and the estate agent may choose to wait outside the property or decide not to be present while viewings are undertaken.
Open house viewings are not allowed at this time.
The government is encouraging the use of virtual viewings before visiting properties in person to minimise public health risks, and socially distant viewings.
If any member of either the household whose home is being viewed, or of the household viewing, shows symptoms of Covid-19 or is self-isolating, then in-person viewing should be delayed.
For the latest government advice in full check here.
Are estate agents in tier 2 open?
Yes.
However, as with tier one, the toughened tier system means more people are being encouraged to work from home where possible.
This might mean some agents choose to work from home, continuing to work digitally and opening their branch by appointment only.
Can I move house under tier 2?
Yes.
The government has been clear that the property market is staying open even as restrictions are toughened, and during the second national lockdown moving services continued with Covid-secure measures in place.
This means estate and lettings agents, removals, valuers and people in sales and lettings offices and show homes can to continue working under the tiered system.
Meeting with people outside your household or bubble “to facilitate moving home” is listed as one of the government’s exemptions from gatherings limits across all tiers.
Advice from the government encourages everyone involved in a home move to be as flexible as possible and to be prepared to delay moves, for example if one of those involved becomes ill with Covid-19 or has to self-isolate.
Which English regions are in tier 2?
East of England
- Milton Keynes
- Cambridgeshire (excluding Peterborough, which is in tier four)
- The following local authorities in Essex: Colchester, Tendring, Uttlesford
- Norfolk
- Suffolk
East midlands
- Northamptonshire
- Rutland
North west
- Cumbria
- Liverpool City Region
- Warrington and Cheshire
South east
- Bracknell Forest
- Brighton and Hove
- East Sussex
- Hampshire (excluding Portsmouth, Gosport and Havant which is in tier four)
- Oxfordshire
- Reading
- Waverley in Surrey
- West Sussex
- Windsor and Maidenhead
- Wokingham
South west
- Bath and north east Somerset
- Bournemouth, Christchurch and Poole
- Bristol
- Devon, including Plymouth and Torbay
- Dorset
- Gloucestershire (Cheltenham, Cotswold, Forest of Dean, Gloucester, Stroud and Tewkesbury)
- Somerset (north Somerset, south Somerset, Somerset west and Taunton, Mendip and Sedgemoor)
- Wiltshire and Swindon
West midlands
- Shropshire and Telford & Wrekin
- Worcestershire
Yorkshire
- City of York
- North Yorkshire
Tier 3 - very high alert
Tier three is reserved for areas in England where transmission rates of Covid-19 are high.
People living in these areas are not allowed to meet anybody outside of their household or support bubble in an indoor or outdoor setting, apart from open public spaces such as parks and beaches, where the rule of six will still apply.
The public are also advised not to travel in and out of these areas, other than for work, education, accessing youth services or caring responsibilities.
What does tier 3 mean for the property market?
The government has been clear that the property market is staying open even as restrictions are toughened, and during the latest national lockdown moving services continued but with Covid-secure measures in place.
However, the government has called for flexibility among movers and sellers under these measures, should plans have to change due to any of the households involved contracting or being exposed to Covid-19.
Can I view properties in a tier 3 area?
Yes.
In-person viewings are still allowed under tier three. However, some estate agents, sellers and buyers may decide to postpone viewings while restrictions are in place.
That said, renewed lockdown measures may also heighten people’s desire to move if they are unhappy with their current accommodation.
Virtual viewings can continue to take place and are likely to be offered by estate agents in the first instance so that any in-person viewings are given to the most interested prospective buyers.
As in the lower tiers, Covid-secure measures should be firmly in place during in-person viewings.
Such measures include the wearing of face coverings, regular hand washing, keeping doors and windows open for good ventilation during the viewing, and only two prospective buyers from the same household entering the property at a time. Sellers and the estate agent may choose to wait outside the property or decide not to be present while viewings are undertaken.
Open house viewings are not allowed under tier three or any of the lower tiers.
You can find out more about what to expect from socially distant viewings in this article.
If any member of either the household whose home is being viewed, or the household viewing, shows symptoms of Covid-19 or is self-isolating, then an in-person viewing should be delayed.
Are estate agents in tier 3 open?
Yes.
However, as with tiers one and two, the toughened tier system means people are being encouraged to work from home when possible.
This might mean some agents choose to work from home, continuing to work digitally and remaining open at branch-level by appointment only.
Can I move house under tier 3?
Yes.
Estate and lettings agents, removals, valuers and people in sales and lettings offices and show homes can to continue working under the tiered system.
Meeting with people outside your household or bubble “to facilitate moving home” is listed as one of the government’s exemptions from gatherings limits across all tiers.
Which English regions are in tier 3?
East Midlands
- Derby and Derbyshire
- Leicester and Leicestershire
- Lincolnshire
- Nottingham and Nottinghamshire
North east
- North East Combined Authority: County Durham, Gateshead, South Tyneside, Sunderland
- North of Tyne Combined Authority: Newcastle upon Tyne, North Tyneside, Northumberland
- Tees Valley Combined Authority: Darlington, Hartlepool, Middlesbrough, Redcar and Cleveland, Stockton-on-Tees
North west
- Blackburn with Darwen
- Blackpool
- Greater Manchester
- Lancashire
South west
- South Gloucestershire
West midlands
- Birmingham, Dudley, Sandwell, Walsall and Wolverhampton
- Staffordshire and Stoke-on-Trent
- Warwickshire, Coventry and Solihull
Yorkshire and The Humber
- East Riding of Yorkshire
- Kingston upon Hull/Hull
- North East Lincolnshire
- North Lincolnshire
- South Yorkshire
- West Yorkshire
Tier 4 - stay at home
Tier four replaces tier three as the very highest level of English restrictions and is reserved for areas in England where transmission rates of Covid-19 are rising rapidly.
People living in these areas are not allowed to meet anybody outside of their household or support bubble in an indoor or outdoor setting, apart from open public spaces such as parks and beaches, where one individual may meet one person from outside their bubble.
Tier four residents have been advised to stay at home and cannot leave or be outside of the place they are living unless they have a reasonable excuse.
The public are also advised not to travel in and out of these areas, other than for work, education, accessing youth services or caring responsibilities.
What does tier 4 mean for the property market?
The government has been clear that the property market is staying open even as restrictions are toughened, and during the latest national lockdown moving services continued but with Covid-secure measures in place.
Leaving your home to undertake activities associated with finding and securing a new home, or moving home, are considered exemptions to the advice to stay at home.
However, people outside your household or support bubble should not help with moving house unless absolutely necessary.
The government has called for flexibility among movers and sellers under these measures, should plans have to change due to any of the households involved contracting or being exposed to Covid-19.
Can I view properties in a tier 4 area?
Yes.
In-person viewings are still allowed under tier four. However, some estate agents, sellers and buyers may decide to postpone viewings while restrictions are in place.
That said, renewed lockdown measures may also heighten people’s desire to move if they are unhappy with their current accommodation.
Virtual viewings can continue to take place and are likely to be offered by estate agents in the first instance so that any in-person viewings are given to the most interested prospective buyers.
As in the lower tiers, Covid-secure measures should be firmly in place during in-person viewings.
Such measures include the wearing of face coverings, regular hand washing, keeping doors and windows open for good ventilation during the viewing, and only two prospective buyers from the same household entering the property at a time.
Sellers and the estate agent may choose to wait outside the property or decide not to be present while viewings are undertaken.
Open house viewings are not allowed under tier four or any of the lower tiers.
You can find out more about what to expect from socially distant viewings in this article.
If any member of either the household whose home is being viewed, or the household viewing, shows symptoms of Covid-19 or is self-isolating, then an in-person viewing should be delayed.
Are estate agents in tier 4 open?
Yes.
However, as with tiers one, two and three, the toughened tier system means people are being encouraged to work from home when possible.
This might mean some agents choose to work from home, continuing to work digitally and remaining open at branch-level by appointment only.
Can I move house under tier 4?
Yes.
Estate and lettings agents, removals, valuers and people in sales and lettings offices and show homes can to continue working under the tiered system.
Meeting with people outside your household or bubble “to facilitate moving home” is listed as one of the government’s exemptions from gatherings limits across all tiers.
The government advice is to follow the national guidance on moving home safely, which includes advice on social distancing and wearing a face covering.
Which English regions are in tier 4?
London
- All 32 London boroughs plus City of London
South East
- Kent and Medway
- Buckinghamshire
- Berkshire (Bracknell Forest, Reading, Slough, Wokingham, Windsor and Maidenhead and West Berkshire)
- Surrey (excluding Waverley)
- Hastings and Rother
- Havant, Gosport and Portsmouth
East of England
- Hertfordshire
- Essex (excluding Tendring, Uttlesford and Colchester)
- Central Bedfordshire, Bedford, Milton Keynes, Luton
- Peterborough.
What about Scotland?
Scotland’s government has imposed a five-level system of coronavirus measures.
Currently, there are 11 areas in west and central Scotland now in the highest level of Covid-19 restrictions, which go from zero (lowest) to four (very high risk).
Can I view properties in-person in Scotland?
Yes.
The Scottish government’s guidance on property viewings emphasises a virtual-first approach.
This means in-person property viewings are permitted, but it is recommended that you view properties virtually in the first instance if possible and only proceed to a physical viewing if you are interested in offering on the property.
Can I move house in Scotland?
Yes.
In Scotland, people can continue to move under all five levels, and to and from areas in different levels.
However, the government suggests people may wish to consider whether they can postpone a move and related activities in areas subject to level four.
You can read the latest guidance from the Scottish government on moving home here.
What about Wales?
Wales recently imposed a four-layer tier system of Covid-19 restrictions.
The country is currently at level three. Here are the explanations of the four tiers:
- Level one (low risk): Level of restrictions closest to normality while infection rates are low and other preventative measures, such as social distancing and working from home, remain in place.
- Alert level two (medium risk): Additional controls to limit the spread of coronavirus, complemented by more targeted local actions to manage specific incidents or outbreaks.
- Alert level three (high risk): The strictest restrictions short of a firebreak or lockdown.
- Alert level four (very high risk): Equivalent of full lockdown.
People living in Wales may:
- move home
- market a residential property for sale or rent and prepare a residential property for persons to move into
- visit estate or letting agents, developer sales offices or show homes for the purposes of the purchase, sale, letting or rental of residential property
- view a residential property.
Looking for a new home?
It’s worth remembering that Zoopla, like other property portals, is open 24/7. That means you can do a lot of your property search online, from exploring our news, guides and insights, and checking out the prices of recently sold properties, to registering to get instant alerts for exactly your type of property - and save as many searches as you want.
Richard Donnell, our head of research and insight, said: “We’ve already seen how the first lockdown led to people carrying out a once-in-a-lifetime re-evaluation of their homes and lifestyles, with a focus on prioritising space. And the latest restrictions will continue to support this trend – particularly for those who are more financially secure.”
Meanwhile, the stamp duty holiday is continuing to act as an incentive for buyers to complete a purchase before the tax break ends on 31 March 2021.
However, with different regions in different tiers, it’s a good idea to find out how your local housing market is operating in a Covid-19-secure way.
Bank of England to review mortgage affordability as Covid-19 creates 'tight conditions’ for borrowers
The review by the Financial Policy Committee comes amid concerns that first-time buyers are struggling to get mortgages.
The Bank of England is reviewing mortgage lending rules which could make it easier for first-time buyers to get on to the property ladder.
Its Financial Policy Committee (FPC) is looking at whether the affordability criteria that borrowers must pass in order to qualify for a mortgage is still appropriate.
The rules, which limit the amount people can borrow relative to their income and ensure homeowners could still afford repayments if interest rates jumped by 3%, are thought to have impacted first-time buyers particularly hard.
The review comes as the number of mortgages available to people with only small deposits has nosedived, with lenders responding by becoming more risk averse in the face of the Covid-19 pandemic.
“Mortgage credit conditions remain tighter than at the start of the year, particularly for high loan to value mortgages,” according to FPC meeting notes in December 2020.
“This reflects reduced risk appetite from lenders due to the economic outlook, as well as operational constraints in meeting the current high demand for mortgages.”
The FPC is due to report its findings next year.
Why is this happening?
Since June 2014, the FPC has recommended that no more than 15% of mortgages advanced by individual lenders are awarded to people borrowing 4.5 times their income.
It also suggested lenders ensure borrowers could still afford their mortgage repayments when their deal ended. At this point, a lender is moved onto a reversion rate of repayment, which is typically 4.5% or higher if interest rates have risen by 3%.
The move was intended to protect the banking system from a high level of household debt following the financial crisis of 2008. However, the reforms were introduced at a time when interest rates were expected to rise by 2.25% during the coming five years.
The Bank of England base rate currently stands at a record low of 0.1%. Interest rates are now expected to stay low for a longer period of time, making it easier for borrowers to service their debts and meaning the current affordability rules may no longer be appropriate.
Who does it affect?
The review of lending rules is good news for first-time buyers who are more likely to struggle to meet the affordability tests than those who have high levels of equity in their home.
Although the FPC said there was no evidence that the current rules had limited mortgage availability, it pointed out that credit conditions had tightened recently, particularly for people with only small deposits, while rates on these mortgages were also higher.
There are currently only eight mortgages available for people with a 5% deposit, compared with 391 in March this year, while the number of different deals for people with 10% deposits has dropped to 88 from 779 during the same period, according to Moneyfacts.
At the same time, the average two-year fixed rate paid by people borrowing 90% of their home’s value has increased by 1.17% during the past year.
What’s the background?
The review comes after Prime Minister Boris Johnson promised to help first-time buyers by increasing the availability of mortgages for people with small deposits.
In his speech at this year’s virtual Conservative Party conference, Johnson announced plans for a new scheme for people with 5% deposits, in a bid to turn “generation rent into generation buy”, although further details were not given.
Meanwhile, the government’s flagship Help to Buy equity loans scheme will be available to first-time buyers from April next year, but applications open on 16 December.
The scheme enables people to purchase a new-build property with a 5% deposit which the government tops up with a five-year interest-free loan.
Top three takeaways
-
The Bank of England is reviewing mortgage lending rules which could make it easier for first-time buyers to get on to the property ladder
-
It is looking at whether the affordability criteria that borrowers must pass in order to qualify for a mortgage is still appropriate
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The review comes as the number of mortgages available to people with only small deposits has dived as lenders become more risk-averse in the face of the Covid-19 pandemic.