The Problem with Land Registry Sold Price Data in 2020

Background to 2020: Why Sold Price Data is No Longer Enough to make Decisions about Buy-to-Let Investments

Those of us in the property industry are the lucky ones. We took a hit, but we bounced back more confidently than most, for three main reasons: 

• Firstly, social distancing in the property sector is less of a problem, than for other areas of the economy. 
• Secondly, housing isn’t a luxury; demand for new houses and private rental accommodation is still there – and rising. 
• And thirdly – build, build, build – the government has made a commitment that sees construction and the housing market as playing pivotal roles in our economic recovery.

So, everything looks good for the property market, right?

That would depend on your outlook. At this time, optimists and pessimists are finding it easier than ever to draw radically different conclusions from the same data. 

The Economic Landscape

The UK has now officially entered the recession that unofficially started months ago before the numbers were confirmed. Economic data is always on a lag and really, that’s what this article is about. 

Areas of the economy are nosediving, unemployment is already high and with the furlough scheme ending on Halloween, a floodgate of redundancies is assuredly going to open, in specific areas of the jobs market.

And there’s more. There are the threats of second waves, local lockdowns, disruption caused by Brexit, reduced demand for commercial property in our cities and the partial-collapse of international travel and trade. 

But while for many, the present and near-future might look bleak, for many, this uncertain environment, is filled with potential and we are seeing fast changes that are both societal and personal. 2020 is shaping up to be a year of reflection that has seen many reconnecting with what’s important and taking steps to re-engineer their lives; whether that means, simply, working from home or taking steps to upskill, cross skill or retrain for work outside their experience.  

Immediate Impacts on the PRS (Private Rental Sector)

As landlords and investors in the PRS, we are in a position to – in the short-term – benefit from low-interest rates and relatively high liquidity in the mortgage market, government stimulus and a rental demand that, in many areas around the country, outstrips supply. 

We are not insulated though from general economic decline, and this one is steep. 

There are disruptions in supply chains for developers and our clients (tenants, for the most part) may find themselves exposed to losing their jobs, through no fault of their own.

We Time-Travelled

One way of looking at it is that we have jumped forward twenty years in just a few months. 

Pre-2020 we could all imagine a society that sees a large proportion of people work from home, where the high street declines, old brands die and international travel becomes more difficult and less relevant to conducting business. 

The problem is not so much the nature of the changes, we have seen, as it is the speed in which those changes have occurred. And this is where I can finally get to my point. In a fast-changing market, it is essential to make decisions based on data that is as accurate, and as current, as is possible. 

And when it comes to buying property, adjusting your existing portfolio or selling property in the coming months, relying on one source of outdated property data is a dangerous thing to do. 

And whether you know it or not, that is, most likely, exactly what you are doing right now.

Land Registry Sold Prices and Price Paid Data

Certain publications, journalists and academics are touting a house price crash, though not necessarily a big one. 

But whilst we may yet see the news, claiming that house prices are down, nationally, by some percentage, this does not mean that houses in your area are down at all – and it says next to nothing about rental income and yield. 

And such reports would unlikely be current because the go-to data source for reporters is sold house price data from the Land Registry, which lags by about three months and found, easily, on portals like Rightmove or Zoopla. 

This is not a criticism. 

Under normal conditions, the property market is like an oil-tanker. It’s big, it’s heavy, It’s compartmentalised and it takes a long time to change direction. In a steady marketplace, house prices and capital growth over a number of years would give you some insight into the next few years to come. 

But in 2020, this is no longer the case. 

Property investors have a lot of opportunities, right now but the pits, we could fall into, just got a lot deeper. In order to confidently invest in a local marketplace, it is not enough to know what that market was doing three months ago and of paramount importance to know what – exactly – is going on right now. 

Your Due Diligence (Fundamental Analysis)

I’m sure I don’t need to remind anyone reading this that research is the key to success. 

But while it isn’t optimum to simply look at historic data on growth, rent and yield and draw conclusions about the future of an investment, it is what a lot of (most) investors, have to settle with. 

Yet in today’s changeable market in 2020, glancing over the data is not enough; a more fundamental analysis of the local market dynamics of an area is needed, before a buy-to-let purchase can be made, with any confidence. 

And we need to be asking more questions such as, who are the major employers in the area, where are the areas most exposed to economic volatility, how has the tenant profile of some areas, being looked at, changed? 

The truth is there is not much we can do. Or is there?

With regards to sold price data being three months out of date, in a fast-changing market, being even more diligent and detailed in our research, is the only answer. 

We must be thorough – very thorough – and sceptical about what any individual data source might insinuate about the future, as well. 

There are, of course, many different sources of information that can be relied upon from the private sector; from reports by large, mortgage-lenders, to the bigger estate agents. And Rightmove, Zoopla, On the Market and Home.co.uk are extremely good at pulling data together. 

But the problem for investors is that none of these sources is specifically targeted at the types of data that are important to them (us). 

This means that we either commit to our research and build out our own spreadsheets to analyse what these data sources are telling us or, more commonly, we become lazy and convince ourselves that our research is sound when we’ve only paid some tiny, nominal lip-service to the spreadsheet gods and little more. 

Property xyz – A Property Platform for Investors

Property xyz is a property search portal designed by investors, for investors, to buy and sell property; the idea is that the platform provides all the data that investors need access to, to make informed decisions about their purchases. 

While this might sound simple, other companies have tried – and failed – to deliver on this promise, most often because key information is missing, with such attempts often ending with platforms being little more than weaker versions of Rightmove. 

Property xyz is different. With a combination of investor-specific data, powerful filters and a large number of listed properties, it’s the ideal portal for property investors and landlords, looking to increase the sizes of their portfolios. 

In a fast-changing market, access to accurate data is essential.

And property xyz also has a research feature so that users can research any property they are considering, whether that’s one that has been found on Rightmove or from any other source. Research and due diligence can be difficult and fragmented but now it can be done easily and all on a single platform. 

Built by investors with decades of experience in the UK’s residential property market and the team behind Property Investments UK, property xyz has been created out of the need to solve the challenges that investors regularly face. 

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