How did the online estate agents fare during Covid-19?
When the initial Covid-19 lockdown period began in March 2020, the property industry effectively ground to a halt from 23 March – 13 May 2020 amidst predictions of a 10% decline in house prices and an industry wide crisis with house sales falling by 90% from early March to the end of April 2020. Those affected included estate agents, developers, contractors, removals companies, surveyors and many more businesses who are part of the wider property market.
Following the reopening of the housing market for viewings and house moves in May 2020, the Chancellor, Rishi Sunak, introduced a temporary reduction to stamp duty land tax rates from 8 July 2020 – 31 March 2021 in an effort to reinvigorate the property market. This saw the nil rate property threshold for stamp duty raised from £125,000 to £500,000 for main residence properties bought during this time, with many properties becoming exempt from the stamp duty tax altogether and those purchasing more expensive properties only taxed on amounts above £500,000.
As a result of the stamp duty “holiday” as it has been named, plus the backlog of property transactions and new buyers who were unable to proceed with purchases from March-May 2020, the remainder of 2020 saw a dramatic increase in property purchases and, consequently, house prices. Indeed, both Zoopla and Rightmove reported their highest number of sales and highest house prices for 5 and 10 years respectively over the summer of 2020.
During the second lockdown period of 5 November – 2 December 2020 and the introduction of a stricter 4 tier system in December 2020 the property market remained open in England* for tenants and homeowners to move home, construction sites, removal firms and estate agents to operate and tradespeople to enter properties. However, estate agents and all associated parties were subject to strict social distancing regulations such as virtual viewings only until a buyer shows serious intent and is in a position to purchase, regularly checking in with all parties for COVID-19 symptoms or to see if self-isolation is taking place before undertaking face to face viewings, valuations or meetings and operating an appointment only system.
As such, property transactions continued at pace in the run up to the initial stamp duty holiday deadline of 31 March 2021 and Nationwide announced an impressive year-on-year rise of 7.3% for average house prices in December 2020, with mortgage lenders busier than they have been at any point since the 2008 credit crunch.
This activity within the property market has continued into 2021, despite a third national lockdown period commencing on 5 January 2021 and expected to be in place until 21 June at the earliest. With thousands of transactions still pending and unlikely to complete before 31 March 2021, the Chancellor provided an extension to the stamp duty holiday deadline until 30 June 2021 via his announcement of the 2021 Budget on 3 March 2021. There will also be a generous nil rate of £250,000 applicable from 1 July until 30 September 2021 when the stamp duty nil rate returns to the pre-July 2020 amount of £125,000.
But how have estate agents faired during the Covid-19 pandemic overall and what has been the fate of online and hybrid estate agents?
With sophisticated online tools already in place, online and ‘hybrid’ estate agents – who offer the personal touch and local knowledge of a high street agent via local experts alongside the cost savings and 24/7 technology of an online agent – were ahead of the game when it came to meeting social distancing requirements.
As such, there has been a considerable increase in vendors using online and hybrid agents. No longer just the preserve of budget conscious vendors who are happy to get actively involved in the sale process in exchange for a significant cost saving, both vendors and buyers are attracted to the impressive technology which offers virtual viewings and 24/7 communication between vendor, buyers and agents plus performance tracking for property advertisements, leading to a quick turnaround when it comes to completing a sale.
With the economy falling by its lowest amount (10%) in 300 years and unemployment rates for October – December 2020 hitting 5.1% we are certainly not out of the woods yet financially, despite the Chancellor announcing an extension to the furlough scheme until 30 September 2021 and other incentives aimed at protecting both jobs and households such as the extension of the self-employment income support scheme and a mortgage guarantee scheme.
As such, the idea of a one-off set fee for selling their home is an attractive proposition to vendors during uncertain economic times. Indeed, some agents even provide a no sale, no fee option or a free of charge estate agency service, with agents making their money through a range of optional, additional services.