What a difference a year makes. At the start of 2020, as the pandemic closed in, it seemed inconceivable that we’d soon be talking about the property industry booming. The flexing values and tipping cranes of real estate are a reliable bellwether of a nation’s economic health after all, and the prognosis was not bright. Indeed, the government has reported a magnitude of recession unprecedented in modern times; a GDP fall greater than at any point in the last three hundred years. So why have property lawyers been reporting a huge growth in workloads?
Setting the pandemic scene
The first reason is policy: the result of sheer force of will from a government with a flagship commitment to increasing the number of new homes. While the construction sector has reported struggles with post-Brexit, mid-pandemic supply line and skilled labour interruptions, the sites themselves were exempt from lockdown restrictions. The Spring Budget brought a mortgage guarantee scheme for first time buyers, while stamp duty reliefs drove demand higher at all points in the chain, as buyers rushed to avoid the standard transaction levy (ultimately, ironically, keeping prices high, while the treasury take fell). So while supply was subdued to some extent, as the houses went up, the queues formed.
By the end of June 2021 (when the stamp duty holiday was finally cut off) the number of transactions had still to fall. The reasons for this demand are undoubtedly more complicated but almost overnight the pandemic has changed how we live and work, and a year later the way we use our properties is still flexing. Remote or hybrid working was of course already tugging at the shirt sleeves of the traditional 9-5 office, but the wholesale homeworking experiment of the last year has proved it’s entirely possible for some workers to live a long way outside commuter boundaries. Tech-enabled office workers have spread their wings and are keen to feather their nests in new places with more space inside and green places out.
Coping with demand
Across the board, housing market demand continues to outweigh supply, and record-breaking pressures are high with news of the strongest spring for sellers in a decade. Variously accused of profiteering from pandemic-led demand, or even delaying transactions through inefficiency, it’s time now for property lawyers to come up for air. Such accusations will feel deeply unfair to those working even harder than usual to meet condensed timetables to completion. The blockers are often third party - it’s been hard to obtain mortgages, for example, and the entire chain has been compromised by limited capacity. Still, in taking a deep breath, there is an opportunity to rethink a few approaches. Pricing might be better rejigged to address peaks and troughs in demand. Client expectations might be better controlled. There may be efficiencies in the technology of lawyering, to smooth transaction and client management.
Getting ready for future flex?
Of course, crystal ball gazing for the longer-term impacts of the pandemic is tricky but the fact remains that for something so fundamentally static, property – its ownership, its use and its development, is in a constant state of flux – never more so than now. Broad recession-led unemployment could pull the rug from beneath the recent market upturn, but people still need places to live. The configuration of city centre office space could well flex to find new round-the-clock opportunities in reduced 9-5 occupancy. The increasingly intense demands of net zero could force a reimagining of space before it permits wholesale redevelopment. The contractual relationships arranged over bricks and mortar tend to be in it for the long haul, and will be subject to renegotiation and reorganisation over time. The real pressure for property lawyers and their firms is to be ready.