There have always been compelling reasons why homeowners look to use a private company to purchase property. Speed is often the most important factor, along with the added certainty of a fixed price, no complexity or extended chain that could slow down, or even scupper the sale completely.
However, a breeze of change is starting to blow through the market, influencing the factors homeowners consider important when looking to sell quickly, and the way in which they want to engage with a property purchasing company.
Over the last 16 months there appears to be a pervading trend in the attitude of the UK property market towards financial instability. The pandemic has had a significant impact upon our financial resilience and most importantly our attitude (or fear) of its consequences.
There will always be a need to sell property quickly and seamlessly. However, the factors influencing the necessity to sell quickly are changing for some.
The Changing UK Housing Market
What has been driving this change?
- The Furlough scheme has acted as a long-term buffer, protecting many from financial challenges that they were facing pre Covid and, in many respects for some, delaying inevitable decisions to be made.
- The buoyancy in the housing market over the last 12 months has also made some people think twice about delaying a sale, in the hope that they will return an extra 5-10% on sales prices as they continue to spiral.
- The Government effectively stalling the eviction process and the guidance to lenders to curtail repossessions, has also lulled a growing number of people into thinking that they are not faced with the same financial pressure as they were pre-Covid.
What is also evident is that as the UK moves out of the financial safety bubble created by the Government, these attitudinal changes will be tested. Many will need help, support, and a possible exit strategy from financial commitments, that for the last 18 months, have not been front of mind.
The level of repossessions in the UK is at an all-time low, as payment deferrals help create a false perception with homeowners.
April 2021 figures show that 19% of the customers of the UK’s top six mortgage lenders took deferred mortgage payments. A finance trade body further suggested that repossessions could see a tenfold increase to over 22,000 by 2022 - up from only 2,900 in 2020. Mortgage arrears could also rise to over 140,000 cases.
This change in attitude and the reduction in the fear of repossession has been compounded on the opposite side of the market where soaring house prices have slowed people’s desire to sell for fear of not maximising their exit value. The classic case of holding off for the best possible deal.
There is then one further factor to consider when looking at the residential home buying market and the implications for companies operating in that sector, regulation.
Alongside our main competitors, at Open Property Group we pay strict attention to the code of practices outlined by The Property Ombudsman and National Association Property Buyers.
However, as the size of our market grows, new market entrants will drive the necessity for tighter self-regulation and organisations such as the FCA may take a more active interest in how our sector operates, how it is policed and ensuring that the consumer is protected.
So, what does Open Property Group perceive will change in the quick sale housing market?
Firstly, as emergency measures continue to lift and support withdrawn housing lender repossessions will increase, even though lenders will be encouraged to show flexibility to borrowers in financial difficulty, turning to possession only as a last resort.
The surge in house prices over the last 16 months will slow during late 2021 and into 2022, which will release some of the property “gaining in value”, which will need to be moved on by homeowners.
This will all be underpinned by an increased regulatory focus, ensuring customers are treated fairly and that property purchasing companies continue to operate ethically and morally. The first signs of this are being identified in how search engines are checking advertisers’ credentials.
Open Property Group embrace any developments that align all property buying companies, placing the customer at the heart of our operations, as we firmly believe we both lead by example and maintain a ‘best in breed’ service for our customers.
The current consumer is more promiscuous, they will shop around, and they want to be sure that they are dealing with a reputable, trustworthy organisation. We understand this and support regulation that would give the customer this level of confidence.
We believe that what the consumer will continue to want is certainty and flexibility. That once an offer on a property is accepted it won’t change, and they are in control of the timescales.
Leading by example, putting the customer first, and ensuring that they have clear, concise information at every stage of the process will be vital. The companies that can provide this will be the ones that can lead the industry and set the standards.
Put simply the future provides an opportunity for those organisations that want to stay one step ahead of the competition to reposition themselves and ensure that they appeal to a consumer market that is looking for a more supportive and advisory approach.
In summary, we believe that the market will see some significant changes over the short and medium term. To ensure our sector remains fit for purpose, we must adapt and embrace those changes. Ultimately, it will be for the benefit of the market sector and the customers we serve.
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