After many months of speculation, an element of clarity has emerged in the past few weeks with the Chancellor publishing his Spring Budget and Mrs May triggering Article 50, thereby starting the process for Britain to leave Europe. While it remains to be seen what the latter may bring, the fact that there was no revision of the Stamp Duty (SDLT) arrangements introduced by George Osborne, as some had hoped, means that more buyers and sellers are accepting the new reality and instead of delaying things further, they are choosing to get on with their lives.
According to the latest figures from Knight Frank, the volume of new buyer enquiries in the prime country house market rose by 3% annually over the year to March and viewings were 11% higher. So far this year, transactions are up against figures from 2015 and 2014 (there was a sales spike the first quarter of 2016 ahead of the introduction of additional SDLT).
This increased appetite is backed up by The Buying Solution’s enquiry levels which are double what they were this time last year. Clients are much more motivated to ask for our help, in part because they’ve reached a point where they’ve waited long enough to see what’s on the horizon politically and economically and want to get on and make the move but also because some have had a go at securing a property they like independently and found that it’s an extremely competitive environment out there.
Such is the shortage of supply of top-quality country houses that we’re doing even more transactions off market. It’s all about access. If you’re on your own at this level of the market, you’re often quite a way behind most buyers as, generally speaking, whenever we reach competitive bidding in the markets we operate in, half of the interested parties could be represented by buying agents.
Just this week, we have agreed two purchases for clients off market–one of which involved a client who had been chasing a property for a year and a half. Often, because of the supply shortage, it’s the vendors who are holding up the process: they can’t find where they want to move to and with interest rates not going anywhere there’s very little urgency on their part. In this scenario, the vendor had finally found the right house and our client was lined up in the wings after we’d already carried out all the due-diligence on the property and been liaising closely with their solicitor. We were therefore able to exchange a contract very quickly, which often makes our client the preferred purchaser. It goes further than that as we are often the key to unlocking a forward chain when the vendor is trying to secure their next house. These sellers are often reluctant to openly market their property because if they lose the opportunity they may have to wait a year for the next to become available. They are also concerned that they face an uphill battle as they need to sell to buy. This can be countered by having a cash buyer all lined up to purchase their property and this is where we can provide the solution. A selling agent is likely to consider this party as a rock solid buyer as we can provide them with the comfort that they are backed by our client who will perform.
Another reason that the market is competitive is that it’s not limited to demand from within the UK. Particularly in the farms and estates market, where it’s smart to invest money in land because of wealth planning, there is now an increasing appetite from overseas buyers in the country market. When you add the currency play into that mix, with the sterling weak against other major world currencies, it’s an attractive time for them to secure a property in the UK.
The TBS crystal ball is definitely showing a continued lack of supply in the market this spring so we are preparing our clients for this and warning them that they are likely to face competition and to be prepared to pay a premium for those that are deemed to be “best-in class”.