At the moment, it somehow seems like tempting fate to think too far into the future, especially in terms of the property market being allowed out of lockdown and progressing towards any sort of normality.
That might primarily be due to the fact that 2020 – especially once lockdown is relaxed – will have a very abnormal look to it anyway.
We should all get used to a rollercoaster ride in the second half of the year, notably around house prices, transaction levels, rates/pricing, lending, and all manner of property-related matters.
But, it’s also because we can’t pre-judge how this situation will continue to unfold.
After all, the virus is not going to have any respect for us all wanting (or needing) to get back to work, and it’s this very fact that might well mean we (including the government) all have to err on the side of caution when it comes to reducing the current measures that are in place.
Perhaps, better to move slowly here than too fast and end up back at square one very quickly.
However, at some point, the lockdown measures will be firstly eased back and then (hopefully) stopped altogether, albeit with social distancing in place for many months to come.
Even between now and then – and with the potential for plenty of water to flow under the bridge – we might all wish to start thinking about what happens next, not only in terms of creating a safe moving environment for clients and all stakeholders, but in terms of streamlining the process to avoid any huge delays when attempting to bring in much-needed income/cashflow.
I recently watched a webinar with an economist, Roger Martin-Fagg, who talked about what it will mean for property professionals to be ready post-lockdown and what sort of circumstances we will all have to cope with.
Some of his main points were around what to anticipate, such as:
- A steep but short-term drop in house prices.
- A period where pipeline transactions start to exchange/complete.
- The wider population finding its feet again and growing increasingly confident in their own job security.
A significant economic rebound pushing property market activity off the back of lower prices, low interest rates, and a pent-up demand to purchase/move. Lending activity is likely to be high and the government’s support might well result in further encouragement to get purchasing moving again.
Now, it’s difficult to judge over what sort of timescale the above might work its way through the system – if at all – but the consensus appeared to be that by September we could have 105,000 property transactions taking place.
Plus a lift in house prices, after their initial fall, of perhaps 5% which might then continue to rise as consumer confidence is stimulated, money being readily available for borrowing – this is not like the Credit Crunch after all – with next year seeing inflationary pressures begin to weigh on interest rates, which might see the bank base rate tipping past 1% in 2022.
Not forgetting of course, the small matter of the government having essentially printed an extra £420 billion of money which, post-lockdown, will be allowed to flow freely through the economy, and to be spent by UK consumers.
We might well see some serious increase in DIY/home improvements, especially from those individuals who want to put their homes on the market in the future.
Overall, it seemed a plausible argument – albeit just one of many economic arguments being made currently - and one that even if slightly likely, would mean that any plans for restarting the market should not just incorporate the safe return of stakeholders to work, safe environments for removers, estate agents, domestic energy assessors and valuers, but also require significant improvements in the home-moving process to ensure those who do not get paid until completion are not having to wait too long for the money to come through - especially after that initial splurge of transaction completions currently stuck in the pipe.
So, while the temptation for agents might be to focus on winning business and reducing that 65-93 days average from listing to sale, there is a strong argument to say they should be equally (if not more) focused on reducing the 140 days between sale agreed and completion, and to do that they need to start thinking about how to start the conveyancing process on listing, not sale agreed.
Tasks like getting conveyancers instructed, ensuring the property information form is completed, ordering title documents and leasehold information and even searches, may not seem like major impediments to the process, but the additional enquiries they can generate are.
Especially when they contain conflicting information when reviewed alongside the title or the valuer’s report.
Without those additional enquiries, weeks can be shaved off the process, and to jump these potential obstacles means ensuring the conveyancer and the valuer have all the right information from the point of sale agreed, not weeks later into the process.
Again, this will have the added safety benefit of reducing post-valuation queries which might otherwise result in a second visit to the property; given the circumstances, this would be best avoided, from both a safety aspect and in terms of moving the process along?
So, as stated, there is a lot that can happen between now and that point, but this shouldn’t stop us preparing for such an eventuality.
It will come, and it’s then that we will all be welcoming the upturn in activity and wanting to capitalise on it. If we’re able to work quickly, then we’ll be able to benefit from those transactions – who wouldn’t want to see money flowing into our firms in double-quick time after a stalled market reignites?
*Beth Rudolf is Director of Delivery at the Conveyancing Association (CA)