I'm going to give you a Housing Market Update for what's happening in the UK property market in December 2020. There's a lot going on right now, so we've got lots to cover in this video.
Let's look at what's happened so far this year in 2020, Now for the last 10 years we have been in a real growth market in the UK And whatever happens, when you have a growing market, you have a boom and at some point you have a bust. So I think a lot of people have been expecting that's going to happen Now at the beginning of 2020. I was talking about the number of landlords who are looking to retire and sell up early
These are people, who've got property portfolios, they might've had for 10, 15 20 years, even and they've got to the point where they think you know what I might think about retiring in the next few years. Typically, when people have portfolios of property, they might give them onto their kids. Very often, their kids have seen how hard their parents work and don't really want to have those portfolios. So very often retiring landlords actually sell the portfolio. They'Ve had a massive growth in value. They sell them, they pay their Capital Gains Tax and they retire on a big pile of money. Sounds like a good idea to me, But in April 2017 the government brought in their new Section 24 Tax Laws, Which meant that if you own property in your own name, which most people do as property investors. And if you have mortgages, which again most people do and if you're a higher rate tax payer, it means you have to pay a lot more tax on your property income.
So, for that reason, some investors have moved their properties into a company structure, which is one of the reasons the government have done this. They want to control property within corporations, they're easier to tax, they're, easier, legislate against. They don't want millions and millions of individual Landlords, But that's another video Anyway, so many people have done that. But some are saying you know what I don't want: the cost or hassle of doing that. I'M just going to retire early, so they're starting to sell up their properties, And we know this because of our network of property meetings all over the country In 2019 and the beginning of 2020, we saw long-term landlords come to those network meetings looking to sell up Some of their properties because of Section 24 and these new tax changes, So that meant a lot more landlords bringing more property onto the market. For this reason, we felt that actually 2020 might see a dip in the market. Then COVID happens.
And really in the UK it kind of hit home the beginning of March And then later in March, we went into the very first lockdown Now what that meant for property prices in the UK was that for 12 weeks or so nothing happened. What I mean by that is all of the lenders. The mortgage companies stopped lending Now. The reason that happened was because A they were very nervous about the market and what was going to happen. This pandemic and lockdown had never really happened here in the UK before, But the main reason was actually, they didn't have capacity to take on new work or even deal with existing cases.
And that's because the government announced that there were going to be these rent holidays for tenants who were struggling to pay because of the pandemic, And there were going to be rent mortgage, sorry, mortgage holidays for the landlords. So what that meant was if you were struggling to pay your mortgage, you could speak to your lender and get three months of mortgage holidays. Now there was a real knee jerk reaction. I think a lot of investors thought well. I don't know, what's going to happen, My tenants might struggle to pay
Maybe I should get this mortgage holiday just in case And so tens of thousands of people landlords applied to their mortgage companies to get these rent holidays Now. The problem was these: mortgage companies just were not set up for this work. They were over overwhelmed and they had to take all their staff out of all the other departments and put them into a department just to deal with the people working for these mortgage holidays. So that's one of the reasons that lenders completely stopped. The other thing is all surveyors stopped. I had three remortgages and one purchase going through in March. Everything stopped. So all the valuations of those just didn't happen for about 10 weeks, And in fact I had a valuation immediately after we came out of lockdown and the surveyor put on this quote. It was for a big block of flats. I'Ve got seven flats up in Halifax And I was expecting the valuation to come up, maybe 900 850. It came in at 750 And they said because of COVID market might change.
So, actually you know the surveyor had already down valued the property because of that So surveyors are being cautious lenders, not lending mortgage brokers and estate agents. All went home, weren't working, So the whole market stopped Now normally in the spring time. At that time of year. There's normally a bit of a boom, but that couldn't happen. So when we came out of the lockdown, I think there was a real relief for a lot of people and suddenly the market went crazy. You had all the people who were trying to get transactions through during the lockdown. All of those pent up demand came through. You had a bit of a natural boom in the summer. Then you had things like the CIBIL loans and bounce-back loans. So there was lots of money sloshing around in the economy. That meant people had more money to buy property.
And then also people who have got money in the bank are worried about what might be happening and think. Is it really safe to leave money in the bank? I had a number of people who are not really in property, they're fellow speakers, other people on other wealth creation strategies, contact me and say Simon. I've got some money in the bank, I'm thinking about putting into property. What do you think I need somewhere safe to put it, So, I think that's definitely stimulated the market and caused this mini boom.
And I must admit this: mini boom has gone on longer than I expected, And then also we had the government who realised that market was going to fall. I mean the Bank of England predicted a 16 % drop in property prices due to the COVID-19 pandemic and the ensuing recession. So the government bought in things like the stamp duty holiday, where they said actually, if you're buying a first time, property or you're moving from one to another home, no stamp duty on purchases up to 500,000 up until the end of March 2021. So this was a real stimulus And certainly a lot of people thought well. You know if I don't have to pay stamp duty, it's a great time for me to go and buy property.
So this stimulated the market. Let me tell you what's happening here in Birmingham and actually it's different all over the country. Obviously, But here in Birmingham properties were going like hotcakes things were flying off the shelf. Things were going for more than the asking price, So the value kept on going up and up and up And what happened was people were making crazy offers? Now, that's all very well if you can get a valuation at that crazy offer, but increasingly what's happening right now. More and more properties are coming to the time where actually they've been sold at a price, often higher than the asking price surveyors are going out and saying. This property is not worth this much' cause surveyors are all being very cautious.
Now it's an interesting point when you think about the UK property market and valuation surveyors what the surveyors think the sentiment of people like the Royal Institute of Chartered Surveyors they're, the people who do the valuations on behalf of all the banks, If they think the market's Coming down, they are going to be very pessimistic and cautious with their valuations, So they are going to lower property at a lower value, But they don't realise - or maybe they do, but that's actually a self-fulfilling prophecy ,'cause. If it's the surveyors, who are valuing the property down, they are causing the property market to come down.
What this means is property sales are starting to fall through Now in the UK property market we see one in three sales fall through. Naturally, I think we're going to see an increase in sales falling through, So that's going to cause properties that are technically sold. Coming back onto the market, More and more properties coming on And I've seen, certainly in my area, more properties coming on and not enough buyers. I'Ve heard some other property traders talk about, there's a real shortage of property. There was, but not now, Things are starting to change And I think we're going to start to see the market to tip and start to come down. Now. I think that the stamp duty extension the holiday until March 2020. We will see a whole load of transactions that people are trying to get through early March, So that might keep the market going a bit. The government might just decide to extend that beyond March 2021, And so what that means is that maybe it might save the market. Otherwise, I think we could see a real drop-off in prices in April 2021.
We also heard in the news very recently that actually the government is being prompted Rishi. The chancellor is being prompted to maybe change the Capital Gains Tax that investors have to pay Now. What kind of effect is that going to have? Well, it depends what comes in in the budget. Obviously, These are only suggestions, a proposal at the moment the media is making a real fuss about this. I don't know if it's actually going to happen And I've said to a lot of my clients. Look don't worry and panic about something that could happen Worry about things that are actually happening in the market. The reality is, there's lots of property on the market that is not selling. There are sales falling through. I think we're going to see the property market dipping and starting to come down. When is that going to happen? Look, I just don't know when that's going to happen.
Nobody knows when that's going to happen, But we think it's going to happen sometime soon. So what does that mean for you? Well, it's important to keep updated on what's happening. I suggest you subscribe to this YouTube channel so that whenever these videos come out, I'm going to give you the very latest of what's happening in the market, But I'd also get ready for a property market crash in 2021. I think that's going to happen. So what does that mean If you're an active investor right now and you've got equity and property and you're thinking about releasing that equity to buy more property? I would get it done right now. There's no doubt in my mind that lenders in the UK are getting very nervous.
We've seen some of the higher loan to rate loan to value mortgages offers being pulled, And actually I think it's going to get difficult to borrow money going into 2021. So if we want to release money, I can't give you financial advice, but if you already plan to do that, you might want to get on with that and do that very soon. And I don't know about you, but I'm going to be watching the UK property market very closely 'cause, I'm getting ready for the property crash. 2021. I think it's going to happen. I think it's going to happen very soon and it's going to be a great opportunity. That means there are going to be more sellers than there are buyers. There might be people who want to buy, but if they can't get the finance they're going to really struggle to do that.
So what that means is strategies such as vendor finance and purchase lease options and exchange and delay completion are going to be strategies that we're going to be able to use in the market in 2021. There'll be a lot more sellers open to those creative finance strategies because they need to sell their properties So stay tuned to this channel. I'M going to keep you updated with, what's going on, I think it's going to be a great opportunity to invest in property. In 2021, If you like this, please, like the video subscribe to the channel, I look forward to seeing you very soon.
Invest with knowledge, invest with skill.
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