Is Now A Good Time to Buy A House in The UK 2020? 



3 October 2020

Is Now A Good Time To Buy A House in the UK (2020)?

COVID. It has affected all our lives in unimaginable ways, and nothing seems to be able to escape from its path. The housing market is no exception – with a current mini-boom faced with uncertainty. All that time spent in lockdown has probably led so many people to rethink their housing situation and seriously consider moving out to the suburbs where housing is cheaper and life is less stressful, all cumulating in a pent up demand post-lockdown.


We’ve recently decided to purchase our first house, and are really excited to share that journey with you. It is a renovation project and we will be documenting the entire process from start to finish and sharing all the details. To kick things off, this article is dedicated to weighing up the pros and cons of buying a house in the UK in 2020 in the middle of this COVID crisis, and hopefully help you decide whether it is a good time to buy a house in the UK in 2020.

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1. Reasons For Buying A House

Potential for cheaper mortgages

Mortgage rates are currently still low due to an all-time low base interest rate of 0.1%. Due to COVID, the Bank of England base rate dropped from 0.25% to 0.1% in March 2020. As it stands, the UK has never seen a lower base interest rate.

There is even the potential for a negative base interest rate, which however does not necessarily mean that there will be negative fixed rate mortgages.

Knowing your budget will go a long way in helping you decide whether you can afford to purchase your new house with a mortgage. You can create a monthly detailed budget and use this mortgage calculator This will help you get a better idea on your monthly repayments, and total interest payable after you've put in details of your mortgage amount, interest rate and how many years you are planning to repay it over. 


Stamp duty holiday

To counter the effects of COVID on the economy in the UK, the chancellor suspended stamp duty on the 1st £500,000 of property sales which has undoubtedly boosted the housing market recovery. This in turn will help save as much as £15,000 which is a huge added bonus. While there are worries of a slump in demand once the tax break ends on 31 March 2021, this has been welcome news for many first time buyers, as reported on BBC.


Change in your housing needs

With an increasing switch to working from home, many people will find that they no longer have to commute into city centres as frequently any more and as such, won’t have to put up with higher house and rental prices. This has led to a growing demand for properties in commuter towns. Weigh up the pros and cons of continuing to live closer to your workplace and commuting from further away – if it makes more sense for you to move further away to save costs, this is certainly a reason to consider buying a house further out.

Modern House

2. Reasons Against Buying A House Now

Short term rise in house prices followed by a fall

UK house prices are forecasted to fall along with an upcoming recession and an increasing number of jobs being lost. Many potential financial losses have been cushioned by government support including the furlough scheme, mortgage payment holidays, providing businesses with low-interest loans, deferring tax payments and increasing support to self-employed people. As such, the full repercussions of the impact of COVID on the UK economy have not yet been felt. As many of these government benefits, especially the furlough scheme comes to an end, we may see a reduction in demand for houses, leading to a subsequent fall in prices.


You May find it more difficult to secure a mortgage

According to this BBC article, you may find your lender requiring you to have a larger deposit to secure a mortgage as there is an increasing worry about missed repayments. To mitigate this risk of default payments, lenders would ask for a larger deposit which may turn out to be unaffordable for a significant number of first time buyers.


So Should I Buy A House Now?

There is no easy answer to this, it all boils down to your individual circumstances. While there is the potential to save money because of the stamp duty tax break, there is greater competition in the housing market and you may need a larger deposit for your mortgage as lenders become more strict on who they are willing to lend to. We’ve also mentioned the potential fall in house prices following this mini-boom. However having said that, if buying your house is a long-term decision and you plan to be staying there for a considerable period of time, it is still likely to be a wise investment choice. Don’t be rushed into making a decision simply based on the stamp duty tax break, but weigh up your options and do your own research into the housing market.



In this article we’ve discussed reasons for buying a house in the midst of the COVID pandemic, including making use of the stamp duty holiday on top of the potential for cheaper mortgages, as well as the reasons against buying, such as the potential for house prices to fall after this current rise and increased difficulty in securing a mortgage. Contemplating whether or not buying a house now is the right decision for you will depend on a range of factors and we hope this article has helped you get started on that thought process. Stay tuned for up to date articles on all things finance!

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