The Guild of Property Professionals has written a letter to the government urging them to include estate agents in the first wave of essential services to be released from lockdown.
The letter stresses that lifting restrictions on estate agents will have a positive knock-on effect for the entire UK economy.
Last week, a number of national newspapers leaked governmental planning surrounding thinking about the UK’s exit strategy.
The report written for government by Conservative peer Lord Gadhia and Sir Jonathan Symonds, GlaxoSmithKline’s chairperson, identified a number of businesses which have the greatest benefit to the wider economy whilst offering minimum risks of further spreading Covid-19.
Coffee shops and restaurants supporting agriculture were seen as vital in unblocking myriad opportunities for connected industries whilst estate agents are viewed as a key stakeholder in the property market who could unblock business pipelines and get the market moving again.
The Guild referenced a number of economic reports and property transaction predictions to highlight the connected industries likely to reignite if estate agents are able to start working again. In the six months prior to completion and year following completion, associated costs and purchases are said to exceed £12 billion.
Additionally, the letter claims that agreed sales currently completing could be worth over £669 million in stamp duty land tax receipts to the treasury.
Jon Cooke, Group CEO of epropservices, parent company of The Guild and Fine & Country said:
“As the Government establishes a strategy around restarting economic activity, it is important that our industry is allowed to open, operate and transact. Our sector can play a key part in the drive to getting the economy on its feet again.
“Our emphasis during this process is to ensure that every precaution is taken to keep people safe.
“We are pushing for the industry to be able to get back to work, but it is paramount that we all follow the correct procedures to ensure everyone is protected.
“We call on the Government to act now, to review and look at estate agency as an essential service to both the public and the economy.”
The full letter sent to the government from The Guild and Fine & Country states:
Lifting restrictions on estate agents will quickly reignite the greater economy
On behalf of all estate and lettings agents, I seek to impress upon you the importance to the greater economy and society of the early lifting of restriction on estate agents and the property sector when safe to do so.
Before I list the financial and economic reasons supporting this, can I thank you on behalf of the property industry for the prompt intervention by the treasury particularly with regard to furloughing and the grant schemes.
Background
As you will no doubt know there are approximately 51,000 estate agents and auctioneers currently working within the UK housing market, not to mention the countless other employees whose jobs rely of the property sector. Housing related activity makes a substantial contribution to GDP. According to a study by Oxford Economics, averaged over the past 10 years, rents (actual and imputed) contributed an estimated 13.8% to household spending or 8.6% of GDP. Dwellings contributed 20.4% of total fixed investment (3.6% of GDP) and value added generated by house building contributed an estimated 2.2% of GVA.
There is also the knock-on impact of the housing market and homemovers on other sectors. The housing market impacts the macro-economy by the effect of activity in the housing sector and via the role of housing wealth in affecting consumption behaviour.
The housing sector is one of the most important influencers in the economy and will be key in rebuilding the financial health of the country post COVID-19.
Revenue for the Treasury
During 2019, Stamp Duty Land Tax (SDLT) income was £4,545 billion, with an average of £4,673 billion for the last four years. 2020 was initially forecast to be higher due to much of the uncertainty surrounding Brexit being removed.
According to the Land Registry, the average price of a property sold in 2019 was £235,000, with SDLT in the region of £2,200 per home.
A forecast for UK housing transactions between 2018 to 2022, published by Statista Research Department in February this year, showed a predicted increase from 1.18 million in 2018 to a total of 1.3 million by 2022, with an average of 1.21 million residential property transactions each year.
According to TwentyCI, the UK’s leading data analyst in the transaction housing market, looking at numbers as of 31 March 2020, the number of properties in the system that have both a Sale Agreed and have Searches Ordered is 163,000. If the total value of these properties is added together, based on the current or last advertised price, the total property value is over £55 billion. In addition to those 163,000 properties, there are a further 155,000 properties with Sales Agreed that have not yet had Searches Ordered.
If these transactions move ahead, based on an average SDLT of £2,200 per property, this could result in potentially generate £699,600,000 in income for the treasury in the first 12 weeks after lockdown.
It is also anticipated that if normal lending resumes there is significant potential revenue the Government could recover for the remainder of 2020. With interest rates at historic lows, we could see many more people encouraged to move houses.
Pent up demand
There are several aspects that are fuelling pent up demand in the market, a market that has already been impacted by issues such as Brexit, a Christmas general election and people holding off moving until 2020. Now, other factors will come into play as a result of consumer’s changing needs brought about by the pandemic.
The knock-on impact to other sectors
The housing market is intrinsically tied to the economy’s resurrection. According to TwentyCI, the largest prime consumer group for retailers selling big-ticket items, from beds and sofas to white goods, tech and electrical, are homemovers. Each year in the UK, both sales and lettings, an average of four million people move house, and excluding the property purchase and transaction costs, these consumers spend £12 billion with the period of expenditure stretching from six months prior to the move to a year past the move and beyond.
Injecting life into the property market will help restart the heartbeat of the wider economy as restrictions begin to lift. Moving home has knock-on advantages to other aspects of the economy, so action taken by the Government to reignite the property market as restrictions relax will have a positive impact on the financial health of the country as a whole.
Estate agents are ready for a safe return to work
Most estates agents now have the tech tools, processes and services in place to carry out the home buying process virtually through means of video viewings and valuations, and electronic contracts and documentation.
Any aspect of the transaction process that would require a person to visit the property, such as an inspection or survey, could be done when the property is vacant or strictly following the social distancing and safety guidance perimeters laid out by Government. All clients will be asked to verify their household COVID-19 status, and clients will be graded according to vulnerability. All client will also be asked to sign a declaration of permission before anyone visits the property. No open houses will be carried out, and no accompanied viewings will be concluded.
Other aspects to consider include that most estate and lettings agency offices are small, can be restricted to two people in an office and can be sensibly laid out and isolated easily. The Guild of Property Professionals and Fine & Country have formulated and will circulate a best practise document on how estate agents can safely run their office.
We call on the Government to act now, to review and look at estate agency as an essential service to both the public and the economy.
