8 things you need to know about property in 2021

Wondering what will happen to the property market in 2021? We round up the key dates and factors at play this coming year

To say there’s uncertainty about the future of the property market would be a bit of an understatement at this point in time.

READ MORE: 25 ways a new home could change your life for the better

Though the most recent house price data shows that property prices have been soaring in recent months, many predict this won’t last and that the double-whammy of Brexit and the pandemic will soon start to bite.

We cover some of the main ways last year will affect the property market going forward and reveal the key events, factors and trends at play in 2021...

1. Stamp duty holiday due to end 31 March 2021

One of the things that's been driving the market’s strong performance in recent months is the stamp duty holiday, which is due to end on 31 March 2021. Many groups have called for an extension, but there’s been nothing yet to suggest the government is going to grant one.

The temporary holiday wipes out stamp duty owed up to £500,000, meaning those buying a house priced at or above this level can save a maximum of £15,000.

Because it’s such a big saving, many people have rushed to buy, swamping banks, surveyors and solicitors with business. This has led to backlogs and delays in house sales, with fears many people with deals agreed will actually miss out on the savings.

Data consultancy TwentyCI crunched the numbers and estimates that 325,000 of buyers who agreed a sale between September 2020 and January 2021 will not get their sale through in time, with those in the South East and North West most likely to miss out.

And for those who haven’t got a deal tied up yet, Hometrack reckons only about 50% of sales agreed in January will go through in time.

2. Rise in rural house prices

With more people working from home, estate agents all over the country have been reporting that many buyers have been fleeing major cities in search of rural locations where they can get more space for their cash, a trend that looks set to continue this year.

According to estate agent Knight Frank, prices for country houses last year grew at the fastest rate for four years, rising 2% in the three months before September alone. It said this was mostly due to London buyers moving out of the capital. A similar trend has been seen in areas around Manchester and cities across the UK.

Similarly, estate agent Jackson-Stops said it was anticipating an increase in house prices in the country homes market in 2021 and expected the trend of London buyers purchasing in rural locations to continue.

3. Planning deadlines extended to 23 March 2021

If you’ve already been hit by a building delay, the good news is that back in July the government announced an extension to the period of time homeowners have to begin works.

Normally you have three years to start construction after being granted planning permission, but if the end of this period fell between 23 March and the end of 2020, it is automatically extended to 1 May 2021.

4. More improving, less moving

With much of the population stuck in their houses for months on end, many people are thinking seriously about extending or improving their homes. According to Google Trends, searches for ‘home extension’ hit an all-time high in 2020.

Research by Santander found that UK homeowners submitted more than 60,000 planning applications during the 13 weeks of the first lockdown last year. It also found that 32% of homeowners are planning large-scale renovations in the next 12 months, up from 18% before the pandemic.

The bad news here is that with so many people looking to improve their homes, this could lead to delays with planning or long waits for builders. Brexit might also play a part in this, with n expected shortage of tradespeople and supplies likely in 2021. If you're looking to renovate, make sure to give yourself a realistic deadline and budget once you've secured a contractor.

5. Help to Buy scheme extended to 28 February

With Covid-19 shutting down building sites for long periods, many buyers were worried that the new homes they were buying under the Help to Buy scheme wouldn’t be built in time to meet the 31 December 2020 deadline.

This was previously the last day for construction to finish under the current scheme. From April 2021, it's being replaced by a new scheme that is only available to first-time buyers.

Fortunately, the government has extended the deadline for the current scheme until 28 February 2021. There’s an extra month for buyers to complete the legal work, giving them until 31 March to have everything finalised. In exceptional circumstances, this may be pushed back to 31 May 2021.

6. Brexit to hit buy-to-let landlords

As the UK severs ties to the EU, the prospect of fewer international tenants and increased competition is likely to hit the buy-to-let sector hard, according to Jeremy Robinson, Group Managing Director of rental guarantor service Housing Hand.

"The requirements for European tenants to travel, work and rent in the UK will change as a result of Brexit," said Robinson. "Renting is likely to become more difficult, as the right to rent requirements will almost certainly change at some point in the not-too-distant future.

"Brexit’s effect on rental property, compounded by COVID, tax and legislation changes, means it is difficult to foresee many positives for landlords in 2021."

7. Mortgage holidays extended to 31 March 2021

According to UK Finance, 2.6 million people have taken mortgage holidays since the start of the pandemic. This scheme had been due to end at the end of October, but banks have now agreed to extend this to 31 March 2021.

Homeowners have until this date to apply to temporarily stop making their mortgage payments, with the deferral period itself ending on 31 July 2021. Borrowers can only have a total of six months of deferred payments, but they don't have to be consecutive.

8. Property experts divided

As much as we might look at all the factors and try to guess what’s going to happen this year, the truth is that none of us has a crystal ball, so it’s tricky to predict what direction property prices will go in.

The fact that there’s a wide range of different views from experts doesn’t make things any easier. For example, the Centre for Economics and Business Research thinks house prices are going to fall 14% in 2021, whereas PwC says they could go up by 1%. 

And while Halifax’s most recent house price index showed house prices in December were 6% higher than at the same point last year, the lender warned a slowdown was ahead.

In such an unpredictable environment, the best plan for many people is likely to be to only buy a property if it's going to suit their needs for some time. If it’s only a stopgap, it might be better to put plans on hold until the future of the market is clearer – though most properties will avoid negative equity over a period of five years or more.

READ MORE: Biggest property shocks and surprises of 2020

Featured image: Ron Ellis / Shutterstock