Adjusting to Covid-19: The impact on developers
At the beginning of the year, the sales market was improving and was off to a good start. Brexit was concluded, the election over and the Bank of England Base Rate remained low. Add to the mix the recent Budget announcements which set the clock ticking for overseas buyers keen to complete purchases before next April when a 2% surcharge in SDLT will be levied meant the property market was buoyant and seeing signs of positive growth. However, Covid-19 has, of course, delayed this interest as people prioritise health and family.
How has Covid-19 affected property developers?
There is some uncertainty over the logistics of the moving process and the speed at which the conveyancing process can take place. With the majority of the parties involved in the conveyancing process working from home or having to implement social distancing measures, the transactions are undoubtedly taking longer. This will of course immediately affect the property market in the short term, therefore, it is imperative for developers that transactions are progressed as far as possible so as soon as the lockdown is lifted those transactions can proceed without further delay, enabling them to continue build programmes to meet demand.
What will happen post Covid-19?
Although Covid-19 has affected the current property market, this is hopefully only for the short term and economists hope that the market should start to bounce back as things with the Coronavirus start to calm down. At this early stage, it is unclear what form and how long the recovery will take. Some economists say a V-shaped recovery in the wider economy is more likely when responding to such external events, meaning the economy will rebound as quickly as it has declined. This is supported by the expected pent-up demand caused by Covid-19 that will make for a busy recovery once the lockdown is lifted.
What will cause pent-up demand?
The recently reduced Bank of England Base Rate to 0.1% will lead to cheaper borrowing costs which will also increase purchaser appetite and demand. This is the lowest base rate since its introduction in 1694 and makes borrowing to fund property portfolio’s even more attractive to investors and borrowers generally.
In addition, the Government have stated there is a very disappointing average of 37,000 homes a year being built in London alone right now, against a target of 65,000 a year. This will inevitably lead to a pent-up demand and supply imbalance later this year which will only contribute towards the V-shaped recovery in the property market.
How Blaser Mills Law can help?
Blaser Mills Law is working closely with developers and buyers to consider the options available to ensure all avenues are considered to maximise their position during this unprecedented time. Should you have any queries please contact Louise Benning, Head of the Real Estate and Development on 01923 725017 or at email@example.com