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While the year 2020 had its share of challenges for the property sector, the residential sector in England and Wales rallied to post impressive numbers by recording £171.7 billion in sales, according to an analysis of property sales on the Land Registry. To observers, such value is noteworthy, especially given the market was operating under a stamp duty tax holiday for half the year. Simultaneously, the pandemic imposed various challenges to property investors, landlords, buyers and sellers. 

This momentum looks to have carried over into 2021, with figures from HMRC showing that residential transactions in the first month of the year registered a 24.1 percent rise compared to January 2020. The data  showed that many buyers were in a rush to beat the 31st March stamp duty holiday deadline, as the number of purchases was still very high. When non-seasonal adjustments are considered, January’s residential transactions were 17.9 percent higher than January 2020 and 25.2 percent lower than December of the same year.  

Unsurprisingly, London leads the way in the value of property transactions made, with areas such as Westminster, Chelsea, Kensington and Wandsworth each recording more than £2.5 billion in property sales over the year. Outside the capital, Cornwall and Birmingham also ranked highly in property sales. 

According to industry observers, HMRC numbers are essential for homeowners, investors and property developers. The data on transactions drives outcomes and prices for these stakeholders, and January 2021’s numbers show a housing market starting to calm after a solid finish to 2020.  

Still, the property market has witnessed strong growth since the strictest lockdown measures were lifted, with many taking advantage of the temporary stamp duty holiday and low-interest rates that make borrowing easier. The temporary reduction in stamp duty, in particular, has had a significant impact on transactions, as buyers can use mortgages to purchase high-value properties. However, when the tax holiday ends, property analysts foresee a drop in transactions. 

For property investors and developers such as Zuneth Sattar, the silver lining in the UK’s housing market is that prices tend to remain stable even in challenging times. Compared to international property markets, the UK provides a relatively safe option, given that house prices generally experience a slowdown rather than a sharp fall. In a season where the market has been prone to changes, a sense of stability has been fuelled by the population’s need to have housing.  

The Buy-to-Let Market 

Stakeholders in the buy-to-let (BTL) market experienced a wild year in 2020. The year’s start was full of optimism and certainty, and market confidence showed in the property data from the first two months. However, the coronavirus pandemic’s arrival quickly put a halt on progress, and the resulting first national lockdown all but put a stop to housing market activity. However, an expected fall in house prices did not materialise for several reasons.  

The stamp duty holiday played a significant role in affording more opportunities, while the government’s job support and economic aid programmes also helped keep more money in the economy. The backlog from the first lockdown was a factor, and collectively as the year rolled on, these factors kept the average house price growth on an upward trajectory.  

Looking to 2021, there’s little doubt among BTL investors that the economic recession will impact house prices. The recession may improve during the year as the vaccination programme continues, but slower rental growth is expected.  

Lockdown measures are eventually expected to ease, and the stamp duty holiday will also likely have an end date in 2021. These factors have been instrumental to property transaction volumes during the pandemic, and their gradual easing will undoubtedly affect the overall market outlook.