The end of the COVID-19 pandemic seems almost in sight in the UK, and with the country slowly reopening, the real estate sector can begin to return to full speed. But how are estate agents preparing for their post-COVID comeback?
During the first UK lockdown in early 2020, a home move was only permitted if deemed “reasonably necessary”. The impact of this limitation was deeply felt across the real estate sector.
Still, business owners running a real estate franchise got creative, and ensured that throughout the pandemic, prospective buyers could look around homes. From virtual tours to homeowner photographs, nothing could stop the industry. Having made it through a challenging year, how will the sector meet shifting post-Covid demands?
How will the real estate sector make a comeback post-COVID?
There are two key dates for estate agents to bear in mind:
- May 17th - Estate and letting agents can continue to work, while still following social distancing, social contact and mask wearing guidelines.
- No sooner than June 21st - All legal limits on social contact will end, and life will largely return to normal in and out of the real estate sector. It’s hoped that, at this point, restrictions around distancing and masks will be removed.
The sector’s comeback will be supported by the extension of the stamp duty land tax holiday until June 30th 2021. People will not be taxed on the first £500,000 of their property purchase - something that 52% of buyers are keen to take advantage of [MFS]. Generally, the sector will transition back to a model of full operations using the same innovative techniques that kept the property industry moving through the past year.
Even before the pandemic, the real estate industry was embarking on a period of seismic change. The pandemic has accelerated many of these trends, while magnifying the issues and bringing into focus the opportunities the industry faces.
—Ciaran Carvalho, CMS Partner and Head of Real Estate
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Customer demand ahead of the real estate sector comeback
In the second quarter of 2020, house sales plunged, but towards the end of the year, they were able to recover [Statista], evidencing that there’s still plenty of demand for new homes. First-time buyers are a huge segment of the client population for estate agents, and in a year that was financially challenging for many, several different schemes and incentives were created to support and encourage first-time buyers:
1. The Mortgage Guarantee Scheme
This scheme was announced a few months ago by the government, as part of the 2021 budget. It aims to help first-time buyers secure a mortgage, by supporting and enabling banks to offer 91%-95% LTV mortgages. The government has committed to stepping in and financially supporting the lender if buyers are unable to pay back their mortgage as per its agreed terms.
2. A Nationwide Helping Hand Mortgage
This is a mortgage and incentive offered by Nationwide, helping to support first-time buyers. The features and benefits included are 5 and 10 year fixed rate mortgages, the ability to overpay up to 10% of the loan, and £500 cashback. Once the deal ends, you’ll be moved onto the Standard Mortgage Rate (SMR). Please note: This incentive isn’t available to those who are self-employed, and is only available to those with a deposit of at least 10% ready.
3. A Lloyds Bank Lend a Hand Mortgage
This mortgage type is offered by Lloyds Bank, and is effectively a 100% mortgage, which doesn’t require a deposit. It depends on the support of a generous family member, who puts up the 10% deposit on behalf of the buyer. This deposit is then held in a 3 year fixed time savings account, and released to the family member after this time passes. If the buyer misses any mortgage payments during the three years, these payments will be deducted from the deposit.
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Real estate sector trends amid the UK reopening
The majority of Brits have spent a lot of time at home over the past year. Changes in circumstance have given many the chance to think hard about what they really value, and about how (and where) they really want to live. These reflections are changing the housing market as we speak, affecting all those who are running a real estate franchise in the UK.
If anything, competition for a property is fiercer than ever, and changes ushered in by Covid-19 are only likely to cause growth in the real estate sector - something that’s made clear by looking at the numbers. In November 2020, the housing market seemed to bounce back, and the annual house price rose sharply to a high of 7.6% [ONS].
Potential investors, take note: This sector can grow with the trends, and weather any storm.
The UK property market continues to weather crises well and proves itself a generally sound long-term investment.
What government support is still available for businesses in the real estate sector?
Even as the picture looks clearer for businesses across the sector, your franchise might still be suffering from the negative financial impact of the COVID-19 pandemic. If that’s the case, know that the government is still offering several different grants and schemes that might apply in your situation:
- The Coronavirus Job Retention Scheme (open until September 2021)
- The Coronavirus Statutory Sick Pay Rebate Scheme
- The Vat Deferral New Payment Scheme (open until the 21st June 2021)
- Business rates holiday for the 2020 to 2021 tax year covering retail, hospitality and leisure companies in England
- The Recovery Loan Scheme
- The Covid-19 Corporate Financing Facility
- The Coronavirus Restart Grant
- The Coronavirus Additional Restrictions Grant
- The Local Restrictions Support Grants
The real estate sector has proven itself to be a solid investment
Running a franchise is a varied and demanding job, but it comes with many different rewards, and far less risk than building a business of your own from scratch. Investing in a booming sector, such as real estate, is a no brainer. If you think you’re a good fit, now’s the time to get involved and find real estate investment opportunities that work for you.
If you’re interested in making a potential franchise investment, but you’re not sure that real estate is the right fit for you, explore Point Franchise’s UK franchise directory to discover the massive range of different profitable opportunities on offer.
Lily Sweeney, Point Franchise ©