Rural relocation fuelled by the pandemic leads to a rise in house prices
With Covid fuelling a search for space, rural areas are becoming more popular, pushing up house prices, and David Hannah, Founder of SDLT specialists, Cornerstone Tax, discusses what this means for the UK property market.
Since reopening in May, the UK property market has experienced a “mini boom,” spurred on by the stamp duty holiday introduced by the Chancellor in July.
According to the Office for National Statistics (ONS), house prices rose by 6.4% in the year to the end of September, compared with a UK average rise of 4.7%.
The South West of England have seen the fastest rise in house prices, as the pandemic has sparked an increase in the number of people relocating from cities to more rural areas. Land Registry data also shows that detached homes saw the biggest annual price rises in the UK.
This is largely due to the race for space being the market’s main driver. Price growth for flats and maisonettes is stagnant, while larger properties have been flourishing amid high demand.
Being placed into a national lockdown once again, and the prospect of further lockdowns being introduced in the future, is strongly weighing on homebuyers minds. Buyers are now prioritising having a property with enough space to fit in a home office, and also placing more importance on having access to outdoor spaces.
A survey conducted by PwC into working habits and home moving plans before and after lockdown, found that over a third of 45-64-year-olds living in the capital “expect to move to a different region outside of London next time they move.” This is a 16% increase compared to pre-Covid.
David Hannah, Founder of Stamp Duty Land Tax specialists, Cornerstone Tax, has commented on these trends, and the effect that they will have on the UK’s property market:
“The Coronavirus pandemic and stamp duty holidays have accelerated a process of de-metropolitanization of global cities in the 21st century. Being in a city like London for example, but not enjoying its benefits during lockdown, will have promoted other properties on the commuter belt.
“The threat of the current lockdown being extended, and even further lockdowns being introduced next year, adds to the thinking that working from home with less time in city-based offices is here to stay for the foreseeable future. This has made people think even more seriously about whether they want to remain living in a city, known for a lack of space, both indoors and outdoors. When you are spending all your time there, it increasingly becomes more of an issue.
“Eventually, prices will fall in cities and rise on the commuter belt and in the countryside, in a market shift of what the market has done over the last decade. While this may have been accelerated by the Chancellor’s stamp duty holiday, it is not the sole reason for this mass exodus.
“When moving out of cities, it is important to understand the different implications of stamp duty including annexes and commercial use of land. These are important and can catch some people out if they do not fully understand the other rules that affect these types of dwellings in more rural locations.”
Kindly shared by Cornerstone Tax
Main article photograph courtesy of Pixabay