As of 1 July, the government’s initiative to stimulate the housing market here in the UK, via the SDLT ‘holiday’, is only available on property transactions below the £250,000 threshold. The impact of this on future transaction levels and residential property values is somewhat uncertain but what is evident is that at least one government initiative to rescue our economy from an economic meltdown caused by the impact of Covid-19 has actually worked.
And yet, despite a record number of confirmed property transactions occurring in recent months, we are seeing some types of property in specific locations failing to sell as a result of changes in buyer behavior. The desire for space has led to an exodus from inner city centres towards the outer suburbs and commuter towns alongside a clear preference by many for houses with gardens rather than apartments.
However, many property developers have been focusing for some time now on the previous long-term trend for inner city living, by providing newly built apartments, and since 2013 by converting redundant commercial buildings to residential use age through permitted development. As we emerge at long last from the pandemic, it remains to be seen whether the new trend for space and for houses with gardens will endure, notwithstanding the higher acquisition costs. What is clear is that despite the recent property boom, some developers of apartments have been finding it more difficult to shift their stock, particularly in inner cities.
Given the above, it was enlightening to hear about a property developer who has recently built and sold a project entirely comprising of houses and in particular to hear how this development was funded.
Hugo Trower MRICS is the investment director at Barwood Capital, which provided the key equity funding to the developer Wedgewood Homes, to build 12 houses in Benendon, Kent. I started out by asking Hugo how their funding business had been affected by the pandemic.