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2021 Home Buyer Statistics: Stamp Duty Holiday Benefited Landlords Most

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The Bird and Co team explore their 2021 client statistics to assess home buyer habits during this year of transition.

In 2020, we took our first deep dive into our client transactions, and saw how the pandemic affected home buyer habits. We saw how first- and second-time buyers behaved at different stages of the year – with landlords dominating – as well as how the Stamp Duty holiday altered buyer habits.

With 2022 beginning to see things head back to “normality”, our conveyancing solicitors have explored their client enquiry statistics over the past year to see how things have changed, if at all.

Here, we will be breaking these statistics down, and discussing any conclusions we can draw from these 2021 stats. We will also be comparing the 2021 figures to those revealed in 2020 and 2019 to see how things have changed. Take a look…

Key Home Buying Statistics 2021

  • 71% of Bird and Co clients in 2021 were first-time buyers, seeing no change from 2020.
  • Over 29% of enquiring buyers in 2021 owned another residential property, which was no different from 2020.
  • An average of over 58% of 2021 buyers who enquired were not buying the property as their main residence, a marked change from 2020, where 35% of buyers were in this position.
  • There was no real notable increase or decrease in enquiries from month to month in 2021, unlike 2020 when enquiries decreased by 77% between Q1 and Q2 due to the pandemic.
  • From January to July 2021, most property enquires were from people not looking to live in the property as their main residence. From August 2021 onwards, this majority switched, with most enquiries from people seeking a main residence.
  • Around 4/5 of homes between Q1 and Q2 were being purchased as someone’s second residence.

Key Takeaways from the 2021 Home Buying Statistics

  • The majority of home buyers in 2021 were landlords, looking for properties to let rather than live in themselves.
  • The Stamp Duty holiday benefited landlords most, with more buyers purchasing properties as a buy-to-let or holiday let throughout the year.
  • Around 10 to 20% of first-time buyers are becoming landlords, rather than choosing to own their own home to live in as their main residence.
  • The situation for first-time buyers has neither improved nor deteriorated in the past couple of years.
  • Government Housing Schemes are seeming to have no effect on the state of the first-time buyer situation.

Comparing 2021 to 2020 Home Buyer Statistics

As you can see from our main figures above, there are some differences and similarities between the stats in 2020 and 2021. But, what can these show us?

2020 and 2021 Home Buying Stats Similarities

Starting with the similarities between 2020 and 2021, there are a few to name. Firstly, the percentage figures of enquiries from people who already own another residential property remained static. In 2020, those looking to purchase who didn’t already own a property averaged at 72% throughout the year. In 2021, this average remained steady at 71%.

The same can be said for those enquiring whose partners already owned a property. Those whose partners didn’t in 2020 averaged at 88%, and this figure was maintained at 89% in 2021.

Similarly, figures for new build enquiries remained relatively steady. In 2020, those enquiring to purchase new build properties averaged at 12%, and this increased to around 14% in 2021.

We can conclude, from this, that the majority of people seeking conveyancing services to buy a property are first-time buyers. This figure has remained constant across the past few years.

2020 and 2021 Home Buying Stats Differences

The main differences between 2020 and 2021 can be seen in the figures discussing those looking to buy properties as their main residence.

In 2020, an average of 35% of people enquired to buy properties that were not intended as their main residence. This fluctuated dramatically between Q1 to Q3, and Q4. The first 3/4 of the year, an average of 19% were not looking to purchase a main residence property, but in Q4, this figure drastically increased to 85%.

We concluded that this coincided with the Stamp Duty holiday, which began in July 2020. Landlords looking to get on the property ladder without having to pay the Stamp Duty Land Tax took advantage of this change, come September 2020.

In comparison, Q1 and Q2 of 2021 saw an average of 87% people enquiring to purchase properties not intended as a main residence. However, the last half of the year saw this figure decreasing to an average of around 25%.

Again, we can make similar conclusions in that the Stamp Duty holiday ended in September 2021. When this ended, property purchases were now back in the hands of those looking to purchase homes as their permanent residence.

This leads us to conclude that landlords benefited from the Stamp Duty holiday more than other sectors.

Second-Time Buyer Statistics 2021

Year on year, the figures for second, third, fourth etc. time buyers have remained consistent, and this is reflected in the 2021 stats too. More specifically, Bird and Co’s internal statistics show that:

  • In 2021, over 29% of enquiring buyers already own another residential property.
  • Nearly 12% of 2021 buyers had a partner who already owned another property.
  • An average of over 58% of enquiring buyers throughout 2021 were not buying the property as their main residence:
    • 17% of enquiring buyers’ homes were purchased for letting.
    • 1% of enquiring buyers’ homes were purchased as HMOs.
    • 2% of enquiring buyers’ homes were purchased as holiday lets.

Across the year, just under 1/3 of Bird and Co’s clients were second-time buyers, whether this be for rentals or holiday homes. So, within the Bird and Co. demographic, that’s around 1/3 of properties being taken off the market as rentals or second homes.

Landlords vs. Home Makers in 2021

Majority of Home Buyers at the Start of 2021 Were Landlords

The most shocking statistics we saw were revealed after asking: “Are you intending to occupy the property as your main residence?”

Results from this showed that from January 2021 to July 2021, those not buying their new property as their main residence maintained an average of around 87%. However, from August to December, this percentage skewed to a much lower value of 29%. If we omit the August value of 63% from this average, we have an even lower figure of 23% of homes not being purchased as the main property between Q3 and Q4.

Put simply, that’s nearly 90% of homes being purchased as someone’s second residence in the first half of the year, reducing to a value of around 1/4 in the second half of the year – a massive change. This sees a skewed yearly average for properties being purchased as a second residence of 58%.

At first glance, we can attribute these figures to the Stamp Duty holiday cut off point in September 2021. With this tax of up to 12% of the property price being reinstated in September, landlords from August onwards were less likely to purchase so as not to fall foul of this increased price.

Skew in Main Residence Purchases Year on Year

When we compared the main residence purchase numbers from 2019, 2020 and 2021, there is a clear disparity. The yearly average for properties being purchased as a second residence in 2021 was 58%. This is much higher than the average of 35% in 2020, but much lower than the steady average in 2019 of 71%.

In a ‘normal’ year unaffected by Covid-19, far more buyers look to purchase for renting, HMO, or holiday let purposes. With this average being so much lower in 2020, but getting higher again in 2021, we can posit that a ‘normal’ year – that is, a year pre-Covid – looks to be more in favour of those not purchasing properties as a main residence.

It’s clear that Bird and Co clients saw main residence purchases and non-main residence purchases as a priority at different points of the year of 2021, compared to the previous years.

Landlords Still Dominating a Large Chunk of Homes

As we’ve seen, 87% of Bird and Co clients in Q1 and Q2 of 2021, and around 1/4 of Bird and Co clients in Q3 and Q4, were looking to buy properties as a second residence. This suggests that the majority of enquiries were regarding purchases for buy-to-let or holiday let purposes.

These statistics show that the buy-to-let sector has continued to hold up during the pandemic. If anything, the pandemic, which spurred the Stamp Duty holiday, has benefited landlords.

First-Time Buyer Statistics 2021

Our statistics definitely show that the majority of buyers are, in fact, first time buyers. In fact, 71% of buyers in 2021 didn’t own another residential property when they solicited Bird and Co’s services. This is a similar story to the previous years, in 2020 and 2019, when around 71% of prospective clients were first-timers too.

That said, as we can see, there’s still a proportion of buyers who already own a residential property. Whether they’re second-time buyers, or landlords looking to start or continue their property empire, there’s a large chunk of homes being taken off the market.

What’s more, it’s clear to see that buying habits have not changed over the past year, despite government schemes. Let’s take a deeper look into this…

First-Time Buyers are Becoming Landlords

A surprising statistic, which we also saw in 2020, was that a large proportion of home buyers were first-time buyers, as we’ve seen above. But, when we consider our statistics above, we can see that, despite this figure, a higher proportion of people were enquiring about properties that were not a main residence.

This suggests that a large number of first-time buyers are purchasing their first home for income purposes. When we work out the difference between first-time buyer enquiries and main resident enquires, around 10 to 20% of those looking to purchase a property as a landlord are first-time buyers.

Whether these buyers decide to let the property out as a letting part or whole, or holiday let, is unclear. What we also don’t know is whether these first-timer buyers are living at home still, or are able to rent a property whilst also letting another property out. Our statistics don’t go as far as to assess this, but it is interesting to see that some first-time buyers are in this fortunate position to begin making money as a landlord.

Government Schemes to Help First-Time Buyers Have Had No Effect

The government have championed various home ownership schemes as instrumental in improving the picture for first-time buyers looking to infiltrate the housing market. However, experts in the field have questioned whether these schemes are too little too late.

At first glance, when we look at the number of first-time buyers on the market, it seems as though these schemes may be working. After all, 71% of Bird and Co clients having never owned a property before looks great on paper. That said, when we consider that this percentage has not increased year on year, we question the efficacy of these home ownership schemes.

This picture is further depleted when we consider the number of new build enquiries seen by Bird and Co. New build property purchase Bird and Co enquiries remain steady at around 10 to 15 percent year on year. Granted, they seem to be increasing gradually (10% in 2019, 12% in 2020, and 14% in 2021), but not at the rate we would expect.

The Help to Buy Equity Loan Scheme, in particular, aims to improve the situation for first-time buyers by providing a large government loan on new build properties. This allows people to borrow up to 20% of the property price (40% in London) from the government, paying a minimum deposit of 5 percent of the property price on new build properties.

This initiative, amongst others, has been in place for a number of years so, if they work as well as intended, we would expect to see the percentage of first-time buyers, as well as the number of new build property purchases rising. In reality, this is not the case.

This suggests to us one of three things:

  1. The government schemes are not working as intended.
  2. New build housing is not being built at the rate it needs to be to meet the demand.
  3. First-time buyers are unaware of the schemes.

The Picture for First-Time Buyers in 2021

Overall, our 2021 statistics demonstrate that the picture for first-time buyers over the past year has not improved. This is clear from the unshifting percentage of buyers, between 2019 and 2021, who are second- or more -time buyers.

This is also corroborated by the fact that most homes being purchased in 2021 were older homes, not new builds. If the government schemes were working, we would expect to see a rising number of new builds being snapped up.

Although there is a slight increase in new builds being purchased between 2019 and 2021, this increase is only by 4%. This is simply not enough to demonstrate that the government schemes are having a huge effect.

The Pandemic Has Had No Effect on First-Time Buyers

Another interesting conclusion we can draw from the Bird and Co statistics is that the Covid-19 pandemic has had no real impact on the first-time buyer market.

A number of experts at the time postulated that the pandemic should improve the picture by allowing people to save on travel and eating out. The reality, however, is that this prediction has not come to fruition yet.

This suggests that the ever-rising house prices are continually pushing property ownership out of reach. Clearly, the underlying problem for home buyers is the lack of affordability all-round.

Looking Ahead to 2022

As we’ve seen, there are some clear similarities and differences between 2020 and 2021. The similarities include first-time buyer and new build enquires remaining relatively static. The differences come mostly down to enquiries regarding main residence properties, which can most likely be ascertained to the Stamp Duty holiday ending in September 2021.

What we don’t know just yet is whether the effects of the pandemic on the property market are easing off, bringing the situation back to how it was in 2019. Equally, we don’t know if we’ll see dramatic changes in a few years’ time, caused by the pandemic.

Ultimately, 2021 was still very much a year of transition, and we hope to see how things level back out again, if at all, in the years to come.

If you’re looking to buy or sell your home in 2022, feel free to get in touch with the team at Bird and Co by calling 01476 591711. Alternatively, head to our website, at birdandco.co.uk, for a conveyancing quote. We look forward to helping you find your dream home this year.

Data Sources and Methodology

The data presented in this article has been taken from the internal database of Bird and Co client enquiry forms. All figures used in this study are as up to date as possible, but may include client enquiries that did not lead to a home purchase.

Although this data was sourced via the Bird and Co internal database, there may be some discrepancies based on client subjectivity. The figures may also not demonstrate the full UK picture, due to being just a subsection of the UK home-buying population.

All conclusions and interpretations are that of the Bird & Co researchers.