A lot in life has changed since the pandemic started. The way we shop, see friends and family, and work have all been impacted. However, ensuring that we remain optimistic and continue with our life goals and ambitions is the best way to continue with our lives.
One life objective that many people are still working towards to is owning a home. Construction of new homes and organised house viewings have been allowed since the first national lockdown was eased in England, and people are continuing on their house-hunting journeys. However, like most things during the pandemic, the way we usually do things has changed.
Looking for answers
With great change comes great questions. Understanding what is possible during the pandemic and between national lockdowns has left potential home-buyers asking how they can continue their journey to homeownership.
National housebuilder St. Modwen Homes has reviewed the changes in Google search data in the past year to see which home buying-related questions have seen a recent surge in searches. This allows us to see which questions have become more popular during the pandemic, and which breakthrough topics have shown a change in the property market.
Between January 2020 and January 2021, Google searches for “should I buy a house now” and “is now a good time to buy a house” increased by 500 per cent and 350 per cent respectively. This may suggest uncertainty surrounding financial adversity, but also the significant benefits of buying a house during the pandemic. While this depends on personal financial situations, the benefits should and will be discussed. However, this may show an eagerness for the next home-buying generation to get their foot on the property ladder.
Popular breakout searches in the past year include “buying a house during coronavirus” and “how much do I need to save to buy a house”. Of course, buying a house during the coronavirus is allowed, though how we organise the process has changed. Equally, buying a property during the pandemic has money-saving benefits. Lower deposits for those who have saved with a Help to Buy scheme combined with exclusive deals for key workers mean this may be the best time to purchase your dream home.
In this article, we will explore these questions, explore the costs of buying a new house, and how you can save money when buying your house, especially during the pandemic.
Savings to be made
Though the pandemic has brought some financial uncertainty, buying a new home now may be the best option for those looking to get on the property ladder — especially people defined as key workers. Incentive schemes to encourage new buyers have created the opportunity for home movers to save thousands of pounds.
The UK government has extended the temporary reduction of Stamp Duty Land Tax until 31st March 2021. This means that if you purchase a residential property below the value of £500,000, you will pay zero tax on the house value. From 1st April 2021, this will rise to two per cent on properties above £125,000. This means that if you buy a house for £300,000 now, you could save £3,500 in stamp duty before the tax reverts to normal. These savings can continue for customers of St. Modwen Homes, who has extended this Stamp Duty holiday until 1st June 2021. This extension means there is now more time to save when buying a luxury new-build home.
For key workers, there are additional savings to be made. The Office for National Statistics estimates that 33 per cent of the UK workforce are in key worker occupations and industries. These workers could save when buying a new home through exclusive deals and special initiatives, which are offered to thank them for their professional dedication during the pandemic. St. Modwen Homes continue to present saving for key workers. The company has created a special offer for those who work in essential services. This includes NHS staff, teachers, and supermarket staff, among others, who continue to lead the fight against the coronavirus. This offer can include contributions towards home enhancements such as flooring, turf, or kitchen upgrades. You can also be supported with legal fees and moving costs, saving homebuyers some of the costs incurred when buying a home.
When applying for a mortgage, banks may expect you to have saved around 15 to 20 per cent of the property value as a deposit. This is to ensure financial responsibility and the ability to pay back the loan. The maximum loan amount is usually 4.5 times your annual salary. However, the Help to Buy scheme can help reduce the expected deposit.
The Help to Buy scheme allowed the government to contribute 25 per cent to the value of your savings, if you deposited money in a Help to Buy ISA before November 2019. From April 2021, the government’s Help to Buy: Equity Loan scheme means you could borrow up to 20 per cent of the cost of a new-build home up to £600,000. These initiatives mean that you may only need to save a five per cent deposit when buying a new-build home. This could help you keep more money in your pocket. You should speak to your bank or lender to understand individual policies.
Therefore, while the pandemic continues to create uncertainty, there are definitely savings to be made. Buying a house is a big step, but the financial benefits of doing this during the pandemic create attractive prospects for taking that leap as soon as possible.
The process of buying a home during the pandemic has changed, especially when it comes to viewing the house you intend to buy. Open houses are no longer allowed because of social distancing restrictions. You can still view a house in person, but this should be organised, and any social mixing should be kept to a minimum.
A safer alternative includes a virtual home viewing. For example, if you were to look for new builds in Wantage, you can view available properties and access floorplans, videos, and images of the property. New technology also allows you to view the property through virtual eyes. 360-degree images mean you can take in every aspect of the property before you decide to buy or organise a viewing in-person.
What’s more, you can book a virtual tour of the property you are interested in. Estate agents will help you understand your prospective house by taking you around on a personal video tour and answer any questions you have. The pandemic has forced everyone to adapt to the unusual situation, but this allows us to understand properties in more depth than ever before.
Though it depends on individual circumstances, it is clear that more people are looking to buy their own houses and are researching the best way to do it during COVID-19. We’re all anticipating a return to normal, but the financial schemes and benefits available during this adverse time have created an opportunity to save money, while new virtual platforms are allowing us to understand the properties we buy in more depth. COVID-19 has changed the way we buy houses, but it shouldn’t stop you.