Has the Property Sector Undergone Irreversible Changes?
There is a timeline for ending lockdown, but it will come after more than a year of industry-shaking changes. Will the property market return to "normal" in the end?
Scott Bozinis, CEO at InfoTrack UK, explores the changes we have seen in the property market and the path ahead post-pandemic.
21 June 2021: it is a date already engrained into the minds of people across the UK. It is the day when Boris Johnson hopes to lift all forms of lockdown and social distancing measures; it is the day life is due to return to normal.
In many respects, however, life will not return to normal – at least, not the normal we knew before the pandemic. Certainly, when it comes to the ways businesses operate and industries function, irreversible changes have taken place, meaning the long-term outlook is not one of returning to the past but preparing for a future defined by new processes. The most prominent of these is the adoption of new technology.
The property sector is a prime example of this. From estate agents and conveyancers through to homebuyers and sellers, the industry is in the midst of many interesting trends which look set to shape the year ahead.
The need for technology will only get stronger
Technology has been embedded in our lives for many, many years. However, when COVID-19 began to spread rapidly in early 2020, forcing offices to shut and people to remain in their homes, there was a further leap from the physical world to the digital.
In the property industry, lockdowns and social distancing rules have caused many headaches. It is, after all, an industry that has traditionally been slow to embrace technology, instead remaining reliant on offline processes and masses of paperwork, particularly when it comes to the transfer of property from one person (or organisation) to another.
In the property industry, lockdowns and social distancing rules have caused many headaches.
In a very short space of time, businesses throughout the property sector had to adapt; digital transformation strategies were greatly accelerated, and entirely new practices were adopted almost overnight. This is especially true when we look at the way in which people buy property, with virtual house viewings, e-signatures on documentation and new compliance requirements quickly becoming the norm.
But it is the conveyancing space that has perhaps been the greatest beneficiary of the sudden rush to embrace technology. With buyers, sellers, agents and solicitors all involved in a property transaction, the conveyancing process has historically been blighted by inefficiencies in coordinating activities, providing updates to stakeholders and securing all the necessary documentation. However, when this process is put through a single digital platform, it becomes exponentially easier, saving time, money and stress for all parties. What’s more, the risks of human error are also removed.
In short, the pandemic has underlined what was already becoming clear to many businesses: technology can provide both competitive advantage and significant efficiency gains. When it comes to conveyancing, technology enables firms to streamline the entire process, automating cumbersome and time-consuming manual tasks so that skilled employees can instead focus on delivering a better service to clients.
There might be a timeline for the easing of lockdown measures in the months ahead, but the property sector’s reliance on technology will not recede in line with these changes. Faced with no alternative, firms have found better ways of working by using digital tools. These tools will not only help them through the limitations of lockdowns but ensure they are better positioned to win more business in the future and maintain higher caseloads.
Will there be an exodus away from British cities?
Away from the fundamental, technology-driven changes that have taken place behind the scenes, the property market could also be facing another notable shift over the coming year. It could be about to witness a significant change in demands from homebuyers, which will have ramifications on businesses in this sector.
COVID-19 has, in the short-term at least, sparked an “exodus” from cities. Unable to enjoy the vibrancy of life they are used to (pubs, bars, restaurants, shops, theatres, museums and galleries all being closed), data shows that urban homeowners have been selling up in their droves so they can move into rural areas.
For example, Londoners bought 73,950 homes outside of the city in 2020, a four-year high, according to Hamptons International. Meanwhile, during June and July last year, the number of city residents enquiring about village properties via property portal Rightmove rose by 126% when compared with 2019.
Will this trend continue throughout 2021? Only time will tell. The reopening of leisure, retail and hospitality businesses may reignite the appeal of city living – or maybe the desire for more spacious properties and greener surroundings will win out.
Either way, it is an important trend for businesses in the property space to monitor. It will, of course, have an impact on house prices and may affect the areas in which they operate.
Tax reforms are on the horizon
Public debt has spiralled as a result of the pandemic, with the Government having little choice but to borrow eye-watering sums of money. This debt will need to be brought under control in the years ahead, making tax hikes almost inevitable.
There are some we already know about: as of April 2021, for instance, non-UK residents that purchase properties in England and Northern Ireland will be subjected to a 2% SDLT surcharge. Coupled with the impact of Brexit, this may result in fewer overseas buyers looking to invest in UK property.
For now, the extension of the stamp duty holiday, as announced in the Spring Budget, will ensure the property markets in England and Northern Ireland remain hives of activity. However, buyers, sellers and property businesses must monitor prospective reforms closely.
Public debt has spiralled as a result of the pandemic, with the Government having little choice but to borrow eye-watering sums of money.
One thing is for certain: even as the virus abates, the transformation of the property industry will not. That’s why I believe we are set for a disruptive 12 months which will radically redefine the property market as a whole.