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Posted by: The Probe 15th September 2021
Richard Lishman talks about the current property market for dental professionals and what individuals need to bear in mind if they are thinking of buying or renting a new home or investing in a new practice:
The UK property market is an unpredictable beast. At the outbreak of the Covid-19 crisis, it was generally expected that property prices would fall. The logic behind this was that, because the future was so uncertain, many people would think twice about investing in new properties and the market value would come down. At the beginning of the pandemic this was certainly true – the market was tenuous in March and April 2020 (the early stages of the pandemic) but all this really proved was that people were uncomfortable with the situation.
However, due to the exceptional level of government support that was granted to both businesses and individuals, the property market has remained fairly consistent when compared to pre-pandemic prices. Measures such as the Furlough Scheme granted people the ability to receive the bulk of their wages without working or being made redundant. Though not the main purpose of this money, many took this as an opportunity to invest funds into purchasing more property.
Ultimately, using the business grants or Furlough Scheme funds this way when you didn’t need to take them is tantamount to fraud, and so if anyone has taken this route it’s important to pay back these funds to the government. It’s likely that once the pandemic has settled down and we reach whatever normal will mean for us in the future, the government will be on the hunt for businesses and individuals who have broken the rules.
Interestingly, although the housing market has remained somewhat stable, people’s available funds have not. Indeed, thousands, if not hundreds of thousands of individuals have been made redundant in the UK, and this has significantly curtailed the options available to these people in regards to investing in new property. Despite this, it seems that the renting market has also remained on par with the housing market, and one thing that may be dictating this is the fact that more people are working from home.
Where a three bedroom house featuring one office was once sufficient, with everyone working from home and the possible need for home schooling, it is no surprise that some people looked to upgrade their homes in order to have the space they needed.
However, caution should be exercised. On the one hand, if you are set on buying a new home or investing in a new practice, the tax break on stamp duty will run until the end of June 2021. This can make a substantial difference.
On the other hand, we have to remember that the pandemic is far from over. With new variants of the virus appearing, it makes sense in many cases to hold on to your money or sell a property if you have a portfolio, as this will give you a monetary safety net to fall back on should the situation go wrong. Another method that some dental professionals are choosing is to sell their home while the prices are good, then rent in the interim time before the inevitable future market changes in order to get the best deal on future properties. This applies to practice acquisition too, and one tactic many professionals are taking is to sit safely until things become more certain. This is a smart move, especially as it is unclear whether the government will extend furlough or offer business grants again if we do need to head back into lockdown or the tier system.
Overall, the property market may seem in flux, but for the most part property prices have fallen over the last ten years. Furthermore, recent reports have found that renting is, for the first time in many years, a cheaper option than buying.[i] Obviously, this will depend on the location in the UK – a rental in London is still likely to cost more than a property in the north of England – but this is another aspect to consider if you are planning to make any changes to your property situation in the near future.
At the end of the day, whether dentists take the gamble in the current property market or choose to wait until things are more back to normal is their decision. There are benefits and risks to both options, which is why it is always important to seek expert advice from sources such as the award-winning team of Independent Financial Advisers (IFAs) at money4dentists.
For more information please call 0845 345 5060 or 0754DENTIST.
[i] The Week. Why Renting a Home is Now Cheaper Than Buying. Link: https://www.theweek.co.uk/953158/uk-property-market-renting-now-cheaper-than-buying [Last accessed June 21].
Richard T Lishman
Managing Director of the 4dentists Group of companies