As every legacy analyst knows, property values are an essential element of the legacy equation. Property makes up half of the average estate, so it’s little wonder that trends in house prices – not only nationally but locally too – can have a significant impact on the legacy income you receive. This article considers how the shift towards home-based working might affect property markets – and legacy incomes – across the UK.
A year ago, we could never have predicted the impact that the pandemic would have on our entire lives. Some of those aspects will gratefully be consigned to history, such as queuing outside supermarkets and Christmas parties on Zoom. However, many changes have been embraced, particularly the homeworking revolution.
Here at Legacy Foresight, we are long-term proponents of remote working, with team members spread from the Yorkshire moors to the Brighton beaches. But now, the pandemic has encouraged many employers to reassess working arrangements, with some shifting to a permanent homeworking model and many others planning a range of flexible home/office-based options. These working practices are already having an impact on the housing market, as people consider where and how they wish to live in the future.
Space is now one of the most important considerations for prospective homebuyers. Home search portal Rightmove reported that “garage” had been the most searched term over the past nine months, as homebuyers look for space-making solutions to create home offices and home gyms.
People aren’t just changing their housing requirements; they are changing location too. Rightmove also reports that Cornwall is now the most searched for location on their platform. As the necessity to be close to a city or daily transport links is becoming less vital, many people are considering a more remote lifestyle.
So, what impact might the shift to greater home-based working and more remote locations have on the legacy market? We put this question to our economist, Jon Franklin.
A survey of employers by the Chartered Institute of Professional Development (CIPD, April 2020) suggested that the proportion of people working from home regularly could double once the pandemic is over. The employers they surveyed expected the proportion of people working from home regularly would increase from 18% to 37%. They also expected the ratio of staff who only work from home to rise from 9% to 22% post-pandemic.
This effect is likely to be seen in all the conurbations across the UK – not just London but also Birmingham, Manchester, Bristol, Liverpool/ Merseyside, Leicester, Edinburgh, and Glasgow. Much of the available evidence relates to working patterns in and around London, so that’s what we have focused on for this analysis.
For those currently working in London, the CIPD findings would equate to around 1 million people regularly working from home who didn’t before the pandemic.
The average commute time into London is 46 minutes, covering a geographic area of London suburbs and some home counties towns. Evidence suggests that when those who work from home travel into the office, they tend to travel for an additional 9 minutes compared to those that are office-based. Increasing the average commute time by 9 minutes expands the potential home location to include more distant towns on rail networks such as Milton Keynes, Stevenage, Reading, Basingstoke, Bishop’s Stortford and Basildon. This suggests that any shift in location is likely to be restricted to potential moves from London to areas in the East or South East of England.
If we assume that 20-40% of those 1 million people choose to move out of London, it would suggest house prices in the London region could be 5-15% lower than they might otherwise have been, with a corresponding 3-10% boost to house prices in the East and South-East regions. It’s important to recognise that any housing market changes could take up to a decade to feed through. The effects of any changes to values will be quite different in the various segments of the housing market. We would expect to see a localised impact in commuter towns and villages and other effects for properties with and without much-coveted gardens.
While this Viewpoint focuses on house prices, arguably, there may also be a knock-on effect on the propensity to leave a gift in your will. Our regional analysis in 2012 showed significant regional variations in the percentage of people leaving a gift in their will – ranging from 11.1 deaths per notification in London to 3.3 deaths per notification in the neighbouring south-east of England (the higher the number, the lower the propensity to leave a gift).
Could the movement out of big cities and suburbs, into smaller towns and villages foster a greater sense of community spirit? Will people consider spending their extra time, not spent commuting, on volunteering or other local projects? And how might this added connection with charities and community groups affect their desire to leave a legacy?
The pandemic has highlighted the importance of adequate living space and access to green spaces. While the cities are not abandoned forever, there is certainly a growing awareness that there is life and community beyond them. How this movement will ultimately impact local communities and eventually legacy giving is as yet uncertain, but, in the meantime, there is much to welcome in this newly balanced approach to work and life.
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