Podcast Summary
Impact of COVID-19 on Property Market Psychology: Despite economic uncertainties, property transactions can still be made. The Property Podcast discusses inflation, interest rates, evictions, and property prices, and provides insights on raising funds for building a property portfolio.
The economic impact of COVID-19 restrictions and the cancellation of the autumn budget may influence the psychology of the property market, but direct property transactions can still be made. The Property Podcast hosts, Rob B and Rob D, discussed various topics in the latest market update, including inflation, interest rates, evictions, and property prices. They also highlighted the upcoming last issue of the Prophecy Hub Magazine, which includes lessons learned from 2020 and an interview with rugby legend Ollie Phillips. Additionally, they released a new YouTube video on six ways to raise funds for building a property portfolio. The hosts acknowledged the impact of the ongoing COVID-19 pandemic and the government's new restrictions, emphasizing the psychological effect on the property market rather than any direct changes. The autumn budget, which was expected to include potential changes to property taxes, was canceled due to the uncertainty caused by the pandemic. Overall, the Property Podcast aims to provide property investors with valuable insights and inspiration every Thursday morning.
Economic measures delayed or changed due to pandemic: The rental reform bill was postponed, VAT cuts extended, loan repayments flexible, but new job retention scheme less generous, and inflation at record low
Several significant economic measures have been delayed or changed due to the ongoing pandemic and related economic challenges. The rental reform bill, which aimed to get rid of section 21 and introduce other measures, has been postponed. In place of the budget, the government announced the winter economy plan, which includes extending VAT cuts for the hospitality and tourism sector and providing some flexibility on loan repayments. However, the new job retention scheme, replacing furlough, is less generous and is expected to have a minimal impact compared to the furlough scheme. Additionally, inflation, which fell to 0.2% in August, is at a record low due to various government support measures. These developments have significant implications for businesses and individuals, and we will continue to monitor and report on the situation.
Considering Negative Interest Rates to Prevent Deflation: The Bank of England is exploring negative interest rates to maintain inflation, encourage spending, and prevent deflation during uncertain economic times
The Bank of England is considering implementing negative interest rates to prevent deflation and encourage spending in the economy. This would mean that keeping money in a bank would cost you money, leading the government and the Bank of England to encourage people to invest or spend their money instead. This is a response to the unexpected mini-boom in property prices, which some fear may lead to a bust as government support measures are phased out. The Bank of England believes that negative interest rates, while unconventional, could help maintain inflation and avoid deflation. These are unprecedented times, and negative interest rates, once considered implausible, are now a real possibility.
Impact of Credit and Lending on Housing Market: The mortgage market's delays and less favorable products could decrease first-time buyers' purchasing power, potentially leading to a housing market downturn if lenders don't expand their offerings.
The availability of credit and lending could significantly impact the housing market in the coming months. The mortgage market is currently experiencing delays and offering less favorable products, particularly for first-time buyers, which could decrease their purchasing power and impact the majority of buyers in the market. This situation could persist if lenders do not expand their offerings, potentially leading to a market downturn. While other factors like the stamp duty holiday and the ending of Help to Buy have been widely discussed, the importance of lending and credit availability seems to be overlooked. It's essential to keep an eye on this developing situation as it could play a crucial role in the future of the housing market. Despite various predictions in the news, it's important to remember that many of them have been inaccurate this year.
Approach property price predictions with caution: Despite inaccurate 2020 predictions, be cautious about 2021 price falls. The CBR's revised growth prediction was expected, but stamp duty holiday added complexity. Evictions resumed, but legal advice advised. Up to 6% of property market affected by mortgage prisoner issue.
The predictions for property price falls in 2021, following the inaccurate predictions for 2020, should be approached with caution. The CBR's revised downward prediction for growth, while understandable, was not an unexpected development considering the information available to the public. The stamp duty holiday was an unexpected factor, but the pent-up demand and financial stability of individuals during lockdown were also evident. Moreover, with furlough still ongoing, there's no significant pressure on homeowners. Regarding property-related news this month, evictions have resumed, but the process is more complicated than before, and seeking legal advice is advised. Lastly, up to 6% of the property market consists of mortgage prisoners due to safety concerns following the Grenfell tragedy and cladding issues. This issue, which affects many property investors, has not received significant mainstream media attention. Overall, the property market continues to present complexities and uncertainties, making it crucial to stay informed and seek professional advice when necessary.
New safety checks for older apartment blocks with cladding: New safety checks for all apartment blocks with cladding built before 2018 result in significant backlog, increased costs, and potential mortgage difficulties for owners and developers.
The safety checks for cladding in high-rise buildings in Australia, which initially applied to structures 18 meters and above, have expanded to include all apartment blocks with cladding built before 2018. This unexpected change has resulted in a significant backlog and increased costs for building owners and developers. Those who fail the safety checks may face difficulties in securing mortgages or remortgages, and in some cases, may require 24-hour security due to fire risk. Even though buildings constructed after 2018 should not require these checks, mortgage companies are still requesting them, causing last-minute delays for developers and additional costs. This situation, which started as a niche issue, is now affecting the entire apartment market. Homebuyers should ensure their developers are aware of these requirements when purchasing new builds, and secondhand apartment buyers should check for an EW1 Form sign-off. For those who already own or are completing now, this new requirement may cause inconvenience and additional expenses.
Confusion over property remortgage forms: The lack of a clear form for property remortgaging is causing frustration for property owners and investors, even in buildings without cladding. The government or regulatory bodies are expected to provide clarification.
The absence of a specific form, required by some lenders for property remortgaging, is causing confusion and frustration for property owners and investors, even in buildings that don't appear to need cladding. This issue, which is relatively new and unclear, is expected to affect many people in similar situations. The government or relevant regulatory bodies are hoped to provide clarification and reduce the spread of this issue. Meanwhile, the podcast continues to provide valuable content and success stories, including one listener who transformed their financial situation by owning five properties within five years.
