Guest Blog: Diversifying Offerings in the Property Sector
By Steve Marshall, co-founder and CEO of Reassured
The stamp duty holiday has had a significant impact on the property market, consumers’ finances and the overall economy as it put renewed vigour into a market that ground to a halt at the start of the pandemic.
The ability to save up to £15,000 in stamp duty fees appears to have created a feverish market and has effectively given consumers more money in their pocket when it comes to buying. This has not only driven the momentum to buy and sell, but it has also given consumers money to spend in other areas, such as furnishing, or doing up a property, thereby impacting the wider economy too.
As industry outsiders, we are not property experts, yet it’s clear that this momentum has led to a return of consumer confidence and a property market that is booming – both in terms of transaction volumes and prices – particularly in high demand rural areas such as Wales.
Clearly there was an urgency among home buyers to get house purchases completed before the stamp duty holiday ended in June. UK house prices rose 13.4 per cent in the year to June according to the Nationwide Building Society, which was the fastest pace since November 2004. Meanwhile, the number of residential property transactions were 74 per cent higher than in May 2021 according to HMRC, as people rushed to take advantage of the last month of the tax holiday.
Originally launched in July 2020 to help people whose incomes had been impacted by the pandemic, the stamp duty holiday meant that buyers were exempt from stamp duty on the first £500,000 of their purchase price. And with the average house price coming in at £271,000 in England, according to the ONS, the stamp duty holiday has meant significant savings for many.
However, with the threshold now tapering to £250,000 until 1 October, when it reverts back to its normal level of £125,000, a slowing of the market seems inevitable, since the tax break will have encouraged many consumers to bring forward plans to buy or sell. Naturally that will have an impact on all firms in the property market – from agents to portals to product providers – as the market slows. So how can property firms continue to build on the momentum created over the last year as a result of the stamp duty holiday?
Equally important will be the need for property firms to be aware of the impact of the ending of government support packages, such as furlough, which could also impact consumers’ willingness to spend.
Increasing touchpoints with the consumer
Diversifying revenues and increasing the number of customer touchpoints will be vital as this will enable firms to maintain a close connection with their customers, whilst also exploring new revenue streams.
Forming corporate partnerships with trusted brands in complementary businesses is one way to achieve this goal. The financial services industry, for example, is a natural partner to the property market, since a house purchase requires everything from initial financial advice to mortgage provision and insurance. Indeed, a review of life insurance should go hand-in-hand with house purchases, or a remortgage, to ensure homeowners have the right protection in place so as not to leave their loved ones exposed, should the unexpected happen.
It’s also worth noting that the pandemic has hit many UK households hard and has highlighted the importance of financial resilience for many, as it has impacted jobs and wages across the country and around the world. As a result, consumers will be re-examining their finances, priorities and spending to ensure they are better protected in future.
Life insurance is a key element of this safety net, and it is especially important when consumers are making a new house purchase or remortgaging, since they will need protection for increased mortgage borrowings. According to Finder.com, the average outstanding mortgage debt is now more than £130,000, yet 42 per cent of people with a mortgage have no life insurance in place.
Partnering with a reputable financial services provider is a strategically sound way to diversify and start offering financial services and products to customers. Property firms may choose to partner with a sole provider or an independent broker in this regard, but the latter will give customers access to a much broader range of products, meaning a greater likelihood of being able to meet the needs of the consumer and giving them more choice as they plan for their futures.
With this approach, buyers will not only be able to secure the keys to their new home, but they can also rest assured that they’ve secured the right life insurance to support that purchase. For property companies, that means another important income stream – and a closer customer relationship – making it a win-win situation for everyone.