I was recently involved in a chain of property transactions which reinforced the importance of the property market.
The chain started off when my clients sold their property to a family who lived outside of the Tayside area – an example of money coming in to bolster the local economy. The sellers of my clients’ new property were moving to a new house within the area, the owners of that property were moving up the property ladder and they bought from a couple who were down-sizing – an example of hippies – people who are using their property either by selling and down-sizing or using equity release to fund their retirement (more of this in future blogs!). The property purchased by the couple who were downsizing was an executry sale – presumably the money freed up from this sale went to beneficiaries who were then able to use it either to fund lifestyles, reduce debt or perhaps purchase property!
This chain shows the impact of the property market on the general economy – the number of transactions having an impact on services – legal, estate agency, perhaps painting/decorating, furniture stores etc. It also shows that the funds at the end of the chain are being freed up for the general economy both by the clients who were down-sizing to fund their retirement and also the executry sale – an asset being turned into cash and passed out to beneficiaries. It also re-enforces the importance of first time buyers.
Readers of previous blogs will know a normal moving market requires a minimum of 40% of its transactions to be first time buyers and while it is good and important to have people moving into areas, every local property market needs its own supply of first time buyers to keep the chain moving. The housing market is very important to the UK economy and also the social fabric of our society and the Government requires to take more action to get the property market moving.Lindsay Darroch Partner Head of Property
PS Since writing this blog the UK Government has announced changes in planning legislation enabling developers to purchase Brownfield Sites for the construction of residential properties and only to pay for these sites as and when the properties are sold. This legislation is only relevant for England and Wales? and while I think its impact will be limited I do think this is another innovative scheme which I welcome. Hopefully the assistance this will give to developers in relation to their cash flow will increase the number of new houses being built and will also enable the developers to offer some form of shared equity or mortgage assistance package for their properties.