In recent years we have seen both peaks and troughs, and at times the market has not just slowed down but dropped straight off the cliff. We have seen competitive closing dates with astronomically high offers alongside properties that did not sell regardless of the prowess of the agent or the added incentives offered up.
For those of you who prefer a more stable market, this unpredictability may be unwelcome; but is it all down to Land and Buildings Transaction Tax (LBTT)?
There have been so many changes made to lender criteria that many have lost track. Add to this the introduction of Home Reports and Energy Performance Certificates, the new Bill for Residential Leases, the Government incentive schemes and tax changes and you begin to understand why the market is so uncertain, even before considering LBTT with it's new 3% surcharge which as of 1 April 2016 will be applied to the purchase of a second residential property (on top of the normal LBTT charge).
The political situation is equally volatile; we have had an independence referendum and a General Election, while the Scottish Elections are in May and the possibility of an EU membership referendum later this year is leaving many uncertain in a market which traditionally does not like uncertainty.
Notably, there has been a 35% drop in properties marketed within the ESPC Portal since 2013, and the average selling time for ESPC member firms has gone from 13 weeks to 5, with some selling in under a week. We have seen indicators that first-time-buyers who have saved their deposits are back in the market, but finding themselves up against investors, pushing demand for a reduced supply. This can certainly be attributed in part to LBTT, as the start of 2015 saw a rush to buy before it came in, and this year we are witnessing a similar surge as investors try to beat the introduction of the 3% surcharge on second homes.
So what can we expect in the near future? While the buy-to-let market has been a popular route for investors over recent years, the new charges may drive them away, reducing the competition for the first time buyer.
Older tenements that have no factoring and were bought with 120% loan-to-value mortgages will likely face an uncertain time; with negative equity and large mutual maintenance bills looming, repossessions in this sector are a real possibility as fewer investors support this market.
Areas where there is a plethora of new developments with various incentives schemes are seeing the second-hand market struggle, with many thinking of moving currently price-trapped irrespective of the LBTT issue.
Location, location, location still holds sway, with sectors of the market that, due to their localities, are experiencing a high level of demand and a lack of supply, and as such prices have in some cases surpassed those achieved pre-recession.
It is evident that there is not a one-size-fits-all formula for buying and selling, especially in this unpredictable market, and LBTT is by no means the only piece of this jigsaw. Luckily, the Morton Fraser Property Team specialises in looking at the individual scenario and advising our clients with clarity and confidence, even in such a fickle market. Working alongside our Tax Advisors and Estate Planning teams, we are confident that we have you covered from all angles and can lead you successfully through this minefield.