It’s more than one year since the onset of the COVID-19 pandemic in the United Kingdom (UK). The effects are noticeable in all sectors and the housing market has certainly not been spared.
With lockdowns enforced countrywide, many renters suffered with loss or reduction of income. As a result, the UK housing crisis worsened.
Even so, there seems to be a light at the end of the tunnel. The UK government has revised some policies in a bid to salvage the housing crisis. Investors and real estate developers have also changed their approach to housing.
In other words, the real estate and housing market can certainly recover after the pandemic, but the pace of its recovery will depend on several factors.
Thirlmere Deacon Property Investment has revealed their five key steps required to boost the UK housing market.
Government-backed mortgages
The UK government plays a vital role in ensuring that the UK’s housing market picks up.
The housing market is a major contributor to the raising of GDP. And for this reason, the government can’t stand and watch it suffer.
Presently, the government is offering financial assistance to those who find it difficult to raise enough deposits. Additionally, there’s a draft bill in progress urging the government to cover rent arrears.
This way, both renters and homeowners will benefit.
Building differently
Current house prices in major UK cities are unbearably high.
Construction costs are also at an all-time high. Consequently, investors have to raise rents to recover construction and maintenance expenses.
Perhaps the solution to this crisis is building differently. Instead of the usual brick-and-mortar houses, investors should diversify to other materials and construction technology.
For example, prefabricated houses shorten the time of building. These can be made in factories and transported to the site. And because they’re made from cheaper materials, rent can significantly decrease.
Encouraging buying-to-let investors may also boost the market. As an individual investor, building a house from scratch can turn out to be expensive.
Instead, leave the construction work to real estate developers. These firms leverage the economies of scale, thus cutting their construction costs by a great margin.
Investors can buy one or two apartments within a high-rise building and rent them out, in consultation with UK housing companies like Thirlmere Deacon Property Investment.
Re-examining UK property taxes
As part of the recovery plan, the UK government has introduced tax holidays for landlords.
The COVID-19 pandemic affected the income of many people. If property owners have to continue paying high land rates, the renter must also bear this burden.
Because of this, the government reduced rates of stamp duty land tax. The move would be a great relief for investors. They can use the savings to construct more houses.
The ultimate goal, however, is to provide affordable housing.
Widespread pay increases
Even though the strongest focus is building affordable houses, something needs to be done about salaries. It’s important to realise that salary increments aren’t on par with rising house prices.
Ideally, no worker should spend more than a third of their salary on rent. But the disparity between income and house prices has led many people to use nearly three-quarters of their pay on housing alone.
To solve this problem, both the private sector and the government in the UK need to unfreeze pay rises.
This way, residents can comfortably pay their mortgage or rent. Additionally, the government should improve employment rights and job security. When employees have stable income streams, they can take long-term mortgages and finally own a house.
Build more affordable houses
The pandemic has certainly taught people to live within their means. Notably, many people started moving from their current houses to cheaper ones. This shift is made mostly out of necessity.
In other words, residents can only pay for what they can afford.
Instead of building lots of high-end houses that are too expensive for the average income earner, housing associations should figure out a way out to build cheaper homes.
This move calls for deeper research into affordable building raw materials and construction technology.
Social renting is equally important. This system involves renting homes from non-profit housing associations or local councils. This arrangement is usually more affordable than private renting.
In conclusion
Despite the negative effects of the COVID-19 pandemic, TDP Investment believe there’s hope for the housing market.
You shouldn’t shy away from investing in real estate in the UK. There are lots of incentives to help you through, including government-backed mortgages and tax holidays.
Another way out is to negotiate for a pay increase if you’re employed.
Also, you may want to build and invest differently. Opt for affordable houses instead of high-end ones. If construction isn’t your thing, buy and let ready-built houses.
