Right now the property market is experiencing a mini boom, due to all the pent up demand from during the lockdown. But don’t be fooled by this false sense of security.
The property market is going to crash by the end of the year, or in early 2021. This is because the UK will slip into recession over the next few months and October will be the crunch point, when the Government’s furlough scheme comes to an end.
Many people who are currently on the scheme may not be brought back to work.
Unfortunately, millions of people might become unemployed overnight.
The Bank of England has predicted this will be the worst recession in 300 years and that property prices could drop by 16%.
So what does this mean for you?
This is going to be a period of massive uncertainty for most property investors, or it could be the best investing opportunity of your life.
You get to chose. Although no one has experienced anything like this pandemic before, the property market has seen many crashes, the last one of course being in 2009.
Whilst some investors lost everything in the last crash, there were those who did extremely well.
First Time buyers
This will enable first time buyers who wish to buy up to the value of £500 to save on tax.
Trading is when you buy a property with the sole intention of selling it on for a profit. The tax holiday will have a very significant boost to trading since the tax element made many deals in the South of England just not viable. We expect to see a significant increase in trading activity in The South.
Buy Refurbish and Refinance (BRR)
Buy, Refurbish and Refinance (BRR) is one of the most popular strategy in use now for portfolio building. This is where an investor buys a property with CASH, often a rundown property, Refurbish the property to add significant value and then mortgages property to take out all or most of their initial CASH investment.
Buy Refurbish and Sell ( BRS)
BRS is when investors buy a rundown property, Refurbishes it with the intention of selling on. Having to pay Tax twice within a short period of time was a deal breaker. The tax holiday will be a very welcome boost to this strategy.
Office to Residential conversion
Office to Residential Conversion is a strategy whereby developers buy qualifying office blocks and convert them into flats. These projects are often much quicker to deliver than new build projects. The tax holiday will make units under £500K more affordable and will fuel the sector.
New Build Developments
The New Build sector, developers who are actually build from ground up should benefit significantly. The tax holiday will drive up demand for units completing now. The limited tax holiday will actually motivate most developers to fast track their projects and ensure completion within the Tax holiday period.
Moms and Pops down sizing
The tax holiday will help drive up the demand for those in big houses who might want to downsize and on the other hand, the fact that they can buy their smaller home Tax free helps as well.
We will see a surge in activity in the market right now.
The Covid-19 pandemic is having a drastic impact on all parts of life, and that includes the auction process, Sam Fongho, Business Development Director of Midas Property Group has put together his 7 top tips for anyone buying at auction. Enjoy this read.
The Property auction industry has had to change quite dramatically to cope with the COVID19 pandemic. All Auctions have had to move online due to social distancing rules and the ban on gatherings.
Apart from the Auctions going online, another major challenge facing Auction buyers is the inability to view properties which are occupied.
The government has lifted the ban on viewings, viewing can now be conducted but with strict social distancing rules being observed. Viewings of tenanted properties cannot take place at the discretion of the tenants.
Our top 7 tips to anyone looking at buying at Auction during the Covid19 period are:
Check if Viewing is possible:
Buying without viewing is for everyone. We advise you check the Auction listing or call / email to ask if viewing is allowed for the LOT your are interested. Auction companies are not allowed to have walking in open houses at moment, everyone viewing has to be booked in. This will allow the auction company to have social distancing strategy in place based on numbers of viewers expected.
Check if your lender accepts desk top valuation:
Not all auction buyers are cash buyers, you are using a mortgage product or bridging, please ensure your lender accepts desk top valuation since most valuation companies are not risking sending their employees into properties at the current time and not all lenders accept desktop valuation.
Check on completion Time scales on special conditions:
The common auction terms usually require a 28 days completion. Most solicitors are working at 50% capacity, creating a bottle neck in transactions. Most sellers are now giving buyers eight weeks or longer completion periods to facilitate transactions.
Don’t by shy to request longer completion period if not offered. We have managed to arrange longer completion periods only for our clients if they won the bid.
Check on the professions of the tenants:
There are many properties being sold on Auctions based on the Yields or Cash flow. The buyers expects to start having an income from the property immediately on completion.
Following months of lockdown, many might not be able to return to work because their jobs will no longer be there! If you are buying a property mainly for the cash flow, we strongly recommend you request employment references or summary of the employment profile of the tenants. Never before have social tenants been so valuable as now. Tenants on benefit are not likely to be affected.
Register to bid at least 24 hours before the Auction starts:
Bidders are required to preregister and pay a 10% deposit and go through an AML and KYC ( Anti Money Laundry and Know Your Client) process before being allowed to bid.
Most bidders leave this to the last minute, with Auction workers all working from different locations in their own homes, this process can take much longer than usual. We know of many potential buyers who have missed out on deals because their registration process could not be completed in time for them to bid.
For those bodding on multiple LOTs, some Auctioneers accept on deposit to allow you to bid for multiple LOTs but other require a 10% deposit per LOTs. This can be very tricky if you intent on bidding for the next LOT only if you didn’t win the first one. Having to put down two deposits can be a pain. You really must contact your Auctioneers.
Make sure you have a good internet connection on the day. Login early enough and
Auction Online Bidding and Home schooling:
We have heard stories of people bidding while home schooling! Please, we advise not to bid on the same table where you are home schooling. Your bid is as binding as a bid in the an auction room, your require 100% attention to this.