UPCOMING EVENTS
National Property Network – Wednesday 26th July at 7pm (Zoom)
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LANDLORD NEWS
Rental prices reach record high
Official figures show private rents rose faster last month than they have since records began in January 2016. According to the Office for National Statistics, across the UK, rents grew 5.1%, with higher percentage rises recorded in Wales and Scotland, which increased by 5.8% and 5.5% respectively. In England, the highest rises were found in the West Midlands at 5.4%, while in London, rents went up 5.3%. In comparison, in the North East they rose by only 4.4%. Neal Hudson, a housing market analyst, said the surge in rental prices was not unique to the UK, claiming a post-pandemic bounce back in demand, combined with rising interest rates that push up landlords’ mortgage costs, have led to similar price rises in US, Canada and Ireland. However, Hudson said in the UK the situation had been exacerbated by a shift to longer tenancies, which had reduced turnover, and by landlords selling or shifting to temporary lettings, squeezing an already scant supply of rental properties.
BBC News Financial Times
Rent soars to all-time high outside London
New figures from Rightmove reveal the average rent being asked outside London has hit a new record of £1,231 per month, which represents a 33% increase over the past four years. The average rent in London is more than double that of the rest of the country, at £2,567 per month, a rise of 28% since 2019. In Edinburgh, average advertised rents have increased by 24.2% in the past year. In Luton, Bedfordshire, the annual increase was 22.4%, while in Staines, Surrey, it was 20.3. Rightmove said that in signs that some landlords are selling up, 16% of properties currently for sale were previously available on the rental market, a figure which is up from 13% in January 2019. Tenant demand is 3% higher than last year and 42% higher than in June 2019. Meanwhile, the average available rental property is rented out in 17 days – the shortest period since November 2022. Tim Bannister, Rightmove’s director of property science innovation, said: “There will continue to be more tenants looking to move than properties for them to move to for a while yet. Average asking rents for new tenants have risen at a rapid pace since the pandemic, reflecting the significant increase in demand, which is driven by a combination of factors, including changed housing needs – such as some space to work from home.”
Daily Mirror London Evening Standard The Guardian The Independent UK
Property investors struggle with rising mortgage rates
Landlords owned a third (35%) of all repossessed properties in the first three months of this year, according to UK Finance. Arrears for this group increased 33%, compared with just a 5% rise for live-in homeowners. Analysis by the Telegraph shows that, despite buy-to-let properties making up 19% of all mortgaged homes in England, landlords were disproportionately affected by repossessions earlier this year, accounting for 35% of all repossessions between January and March, or 410, of all 1,160 repossessions earlier this year. During the same period – between January and March – live-in homeowners accounted for just under two thirds (65%), or 750, of repossessions despite making up a greater 81% of mortgaged homes. Paul Shamplina, of legal firm Landlord Action, said: “Landlords are struggling with rising mortgage costs. We had one landlord whose buy-to-let mortgage went from £350 a month to £1,100 a month. Landlords staying in the market and coming off a fixed rate to a standard variable one are having to increase their rents, meaning many tenants are having to swallow rent rises in the midst of a cost of living crisis.”
The Daily Telegraph
Sadiq Khan urges Government to protect London’s housing supply
London Mayor Sadiq Khan is urging the Government to protect the city’s housing supply amid a surge in short-term let (STL) properties. Currently, there are over 80,000 STL listings on Airbnb in London, with around one in every 74 homes available for short-term rental. While STLs are important for tourism, Khan believes insufficient regulation and monitoring by boroughs make it unclear how many exceed the permitted rental period of 90 days per year. He calls for a licensing system to empower local authorities to limit the number of licenses issued in their areas to prevent entire streets or blocks from becoming exclusive STL properties. Additionally, Khan asks for legislation requiring short-term let platforms to share data with authorities to understand the impact on housing supply and residents. Mr Khan said: “I am doing all I can to tackle the housing crisis in London, building a record number of the genuinely affordable, high-quality homes that Londoners deserve. But these efforts will continue to be hampered by the lack of regulation in the short-term letting market. We need transparency about how many properties are being rented out for longer than the rules permit, and accountability to local authorities and residents.”
Inside Housing
BUY TO LET
Young investors take over as older landlords cash out
The Times looks at how young investors are taking over the buy-to-let market as seasoned landlords retire or leave due to higher interest rates and stricter regulations. Almost 200,000 buy-to-let properties were sold last year, with another 900,000 expected to be sold by landlords aged over 65. Almost 30% of the 2,800 buy-to-let companies set up with GetGround in the past 12 months had shareholders aged 35 or younger, up from 23% the previous year. Experts say the increase in buy-to-let companies, particularly among shareholders aged 35 or younger, reflects the increasing popularity of holding properties through a company structure. The tax changes in 2017 made this method more beneficial than owning properties individually. While there are complications and costs involved in transferring property ownership to a company, the benefits of lower tax rates and deducting mortgage interest make it an attractive option for investors. Neil Dawkin from the Leeds estate agency HOP said: “We’re typically seeing older landlords deciding that now is the time to cash out and sell up. Many don’t want to adapt to the new legislation proposals and instead are taking advantage of recent house price rises. In their place a newer generation of investors are buying and modernising properties for today’s market, with our typical clients now in their late thirties and forties.”
The Times
COMMERCIAL
Small businesses offered rent-free shops on Oxford Street
Small businesses on Oxford Street are being offered rent-free shops as part of a £10m scheme to boost the area and prevent more American-style candy stores from opening. The scheme, called Meanwhile On: Oxford Street, is being run by Westminster Council and the New West End Company, and is aimed at businesses looking to launch their first store or physical space. Selected brands will be given a prime store location for an initial six-month period, rent-free and with a minimum reduction of business rates of 70%. Stores will either be available for single occupancy or as a “themed concept store” shared between multiple brands. Geoff Barraclough, cabinet member for planning and economic development, said the plan would “help future-proof the nation’s high street by offering innovative local businesses as alternatives to low quality occupiers and candy stores”.
BBC News Daily Mail London Evening Standard
Priory Group completes £43.7m property sale and leaseback
The Priory Group has completed a sale and leaseback deal for five of its properties, raising £43.7m after its takeover by Waterland Private Equity for £1.1bn. Britain’s largest mental healthcare chain has agreed the sale and leaseback of five sites to Medical Properties Trust, of the United States, for proceeds of £43.7m and has signed lease terms that will rise in line with inflation. It comes after the Dutch private equity firm funded its purchase of The Priority Group through the sale and leaseback of 40 of the latter’s hospitals to raise £800m in 2021. A Priory spokeswoman said sale- and-leaseback deals were a “well- established and secure method of financing, when managed correctly. We have no concerns about our ability to meet operational costs and invest in our services.”
The Times
AUCTION NEWS
Record number of homes sold at auction
New data from iamproperty shows that estate agents sold a record number of properties via auction between April and June. According to the proptech firm’s latest Online Auction Index for the second quarter of 2023, its 6,000 partner agents sold 2,354 properties via the Modern Method of Auction (MMoA) during the period. This was up 32% annually, raising more than £412m in capital value for vendors – a 24%, rise. Sales also steadily increased from the first quarter of the year when there were 2,252. Agency fees from auction sales also grew to £8.2m, up by 26% from £6.5m in the first quarter. The south of England experienced the biggest growth, with a 67% increase compared to the same period last year. The highest selling property during the quarter was in Essex and sold for £2.4m, according to the index.
Estate Agent Today
Warning over putting unsuitable homes up for auction
Agents and sellers are being warned not to auction off unsuitable properties. Stuart Collar-Brown, CEO of online auctioneer platform My Auction and the Assured Sales service, warns putting the wrong type of homes under the hammer risks leaving vendors with large losses. Mr Collar-Brown said uncertainty in the market about interest rates, house prices and mortgage pricing is confusing clients, adding: “They have properties which are not worth anywhere near the asking price they are trying to achieve on the open market. They are desperate to sell but can’t afford to sell at the price their property has dropped to.” He added that many vendors are now turning to auction houses such My Auction with many taking homes on which in a normal market would never be seen in an auction. He said these are very often multi-million-pound properties. Collar-Brown said the idea and messaging towards the vendors is to put a high reserve on the property and it will then garner enough interest at auction to make close to the open market value. However, he warned, when these unsuitable auction properties are being marketed by the auction house, the process is pushing down the price of the property further and lowering its capital value.
Estate Agent Today
PROPERTY FINANCE
House prices rise at slowest rate in three years
Figures from the Office for National Statistics show that house prices rose by 1.9% in May compared with the same period last year, down from the 3.2% recorded in April and the weakest rate since July 2020. The average UK home is now worth £286,000, £6,000 higher than a year ago but below the £293,000 peak recorded in September last year. In England, the average house price grew 1.7% to £304,000, while in Wales it rose 1.8% to £213,000. In Scotland, the average price was up 3.2% at £193,000 and Northern Ireland saw the average rise 5% to £172,000. Chris Druce, at Knight Frank, the estate agency, said higher borrowing costs in the coming months “will make it hard for buyers to plan and lead to further hesitation in the market, keeping downwards pressure on prices.” He added: “We expect house prices to fall by 10% over this year and next, although strong wage growth, low unemployment and the forbearance of lenders will make steeper falls than this unlikely.”
The Times The Independent
London’s wealth divide revealed
Official figures have highlighted London’s gaping wealth divide, with the average price of a semi-detached house in Kensington reaching nearly £11m for the first time last year, 24 times as high as the average cost of a semi in Barking, and in Dagenham and Rainham. According to the Office for National Statistics, in 25 London constituencies, the mean price of an existing semi was above £1m, with the highest in Kensington at £10,893,289 in 2022. In Chelsea and Fulham the figure was £5,366,731, Westminster North £5,133,980, Holborn and St Pancras £3,234,360 and Hampstead and Kilburn £2,882,460. In comparison, the average cost of a semi in Dagenham and Rainham was £446,988, Barking £447,000, Erith and Thamesmead £460,257, East Ham £464,545, Bexleyheath and Crayford £484,695, and Hayes and Harlington £490,214. Claire Harding, interim chief executive of the Centre for London think tank, said: “The gap between those on the property ladder and those for whom home ownership is impossible is now a chasm, leaving more and more Londoners renting, lacking security and exposed to poor quality homes.”
London Evening Standard
LENDING CONDITIONS
Inflation figures bring hope for cheaper mortgages
Cheaper mortgages could be on the way after inflation fell to 7.9% in June, from 8.7% in May, according to the Office for National Statistics (ONS). This puts price rises, as measured by the consumer prices index (CPI), at the lowest rate since March 2022. The fall in inflation exceeds analysts’ expectations, with a dip to 8.2% having been forecast. The ONS said falling fuel prices had driven the slowdown in inflation, with the fact that food prices are rising less quickly also having an impact. Core inflation, which does not include volatile price changes in food and energy, eased to 6.9%. Both Prime Minister Rishi Sunak and Chancellor Jeremy Hunt welcomed that better-than-expected slowdown in inflation but reiterated the importance of sticking to a plan they hope will halve inflation to around 5% this year. David Morris, chief commercial officer at Yorkshire Building Society, said: “There’s a few weeks’ lag between the underlying funding rate and what mortgage rates do, but I think you will see that flow into pricing over the next two to three weeks, as it’s in lenders’ interests to offer cheaper rates.”
The Times The Daily Telegraph
Mortgage rates drop for first time in months
Mortgage rates have fallen for the first time in two months, with this coming after inflation fell from 8.7% to 7.9%. The average two-year fixed residential mortgage rate has dipped to 6.79% on Thursday from 6.81%, according to Moneyfacts, while the average five-year fixed residential mortgage rate edged down to 6.31% from 6.33%. This marks the first dip in average rates since a 0.01 percentage point fall seen at the end of May. However, the average two year tracker mortgage has remained unchanged, at 6.03%. It comes after lenders including Generation Home, MPowered, NatWest and Yorkshire Building Society have cut rates by up to 0.6 percentage points over the past two days. Nick Mendes of broker John Charcol said swap rates – the rates at which banks lend to each another – had seen a “significant drop” following the release of June’s inflation data, with markets lowering their expectations of how high the Bank of England’s base rate would get.
The Daily Telegraph The Times The Guardian The Independent UK
ECONOMY
Interest rate rises will hit growth next year
The UK is facing a prolonged economic slump caused by higher interest rates, economists have warned. EY Item Club has cut its growth forecast for 2024 and 2025. The group said the economy is set to grow by 0.8% next year, less than half its previous prediction of 1.9%. GDP growth will rise to 1.7% in 2025, the economists said, down from their previous forecast of 2.3%. Martin Beck, chief economic adviser to the EY Item Club, said: “You have got this much bigger rise in interest rates than we were expecting, and that takes time to hit the economy, because of fixed-rate mortgages. It will hit harder next year than this.” He added: “The Bank of England’s hawkishness is going to condemn the economy to sluggish growth.”
The Times Daily Mail The Daily Telegraph
