Paresh Raja, CEO, Market Financial Solutions
Regardless of the state of the market, it’s always important for lenders to remain as flexible as possible. In good times and bad, we should never let our guard down.
It’s always easy assessing things in hindsight. The risk is that we’ll find ourselves in a false sense of security that leads to complacency. If we struggle to adapt to the market as it changes suddenly or without warning, we risk letting down homeowners, property investors and landlords.
Take the pandemic and its fallout. As the world was effectively shut down, and we were all ordered to stay at home, it was relatively easy to predict how the market would react. Few were likely taken by surprise when office values started to drop.
As priorities continue to change, we’ll continue to be ready
As the economy slowly opened up again, and we adjusted to a new working world, it was also clear that fresh priorities would emerge. Our latest research report laid this out with results that make complete sense within our economic context.
Our Homebuyer Wishlist report surveyed 2,000 representative UK adults in mid-July, 412 of whom had either bought a property in the prior year or were in the process of doing so. We compared the results to the same survey we conducted in 2021, at the height of the pandemic.
Buyer wishlist
In terms of what buyers consider to be the most important factor or feature of a home, broadband and mobile connectivity took the top spot. Some 82% of respondents ranked this as either somewhat important or very important. With so many people working from home, decent connections are needed for all those Zoom calls.
For some, however, the impact of the pandemic is starting to wane. Garage or off-street parking, along with transport links, also shot up in the ranking between 2021 and 2024. Certain industries are now pushing to have employees back in the office full time, so this also makes sense.
With IHT costs potentially rising, will buyers find themselves seeking out cosier abodes which fall under the IHT threshold?
Again, we had years to factor all this in. Property investors had time to digest shifting lockdown rules, changing working habits and economic tribulations. Arguably, what we need to focus on now is how the market will adapt in the short term.
In a relatively short space of time, we’ve elected a new government and are ushering in what’s set to be a dramatic Budget. A new set of priorities may rapidly emerge in the coming weeks. We need to be ready for the fallout.
Take the feature which came dead last in our 2024 ranking — proximity to good schools. With VAT changes on the way, the impact of which will only truly be laid out on Budget day, buyers may suddenly have a heightened interest in local Ofsted ratings.
As we adjusted to a new working world, it was also clear that fresh priorities would emerge
Then there’s the square footage of the property, which dropped five places in our rankings. Simply put, larger homes tend to cost more. But, with inheritance tax (IHT) costs potentially rising, will buyers find themselves seeking out cosier abodes which fall under the IHT threshold?
There is already evidence to suggest this is on homeowners’ minds. The number of big houses being listed on Rightmove has jumped 15% year on year, potentially partly as a result of owners trying to avoid imminent hiked taxes.
Green measures
Looming environmental changes may also play a part here. In relatively quick succession, we saw the last government scrap its plans to enforce minimum energy performance certificate ratings, only for a strict deadline to be reintroduced by Labour. Generally, the state has had ecological reform in its sights for several years.
We’re aiming to be as green as possible, and large homes often consume more energy. In fact, houses exceeding 2,000 square feet tend to use between 14,000 and 18,000 kilowatt-hours annually, nearly double what smaller houses of less than 1,000 square feet use. With the pressure on, it’s no wonder we’re seeing preferences shift here.
If we struggle to adapt, we risk letting down homeowners, property investors and landlords
Evidently, lenders must adapt when preferences in the market evolve gradually, or materialise with little-to-no warning.
At Market Financial Solutions, we’ve been in the specialist lending market for nearly 20 years. We’ve learned to remain flexible in the face of nasty economic or political surprises, as well as be there for property investors who are planning years ahead.
Adapting to the needs of the market is what we do. It’s why we’ve added to our bridging range, entered the buy-to-let market, and launched new products continuously over the course of several years.
As priorities continue to change, we’ll continue to be ready.
READ MORE ARTICLES FROM THIS SPECIAL REPORT BELOW:
