LANDLORD NEWS
Rental prices continue to rise
Figures from the Office for National Statistics (ONS) show that private rental prices paid by tenants in the UK increased by 4.9% in the 12 months to March 2023, representing the largest annual percentage change since similar records started in January 2016. Rent growth has more than doubled since March 2022 and has hit a new all-time high every consecutive month for nearly a year, as an increasing number of landlords leave the buy-to-let sector and demand overwhelms supply. The price of rent in the capital grew by 4.8% year-on-year, which was the highest rate since December of 2012, while the East Midlands recorded the steepest increases of any region in England, with growth at 5.1%. Barret Kupelian, economist at PwC UK, said growth amongst newly let properties is even higher at 9% to 10%. Carl Howard, chief executive of Andrews Estate Agents, said: “Rate hikes and red tape have combined to push some landlords towards the exit door as investment properties feel more trouble than they are worth.” He added: “Many older buy-to-letters nearing retirement are deciding to cash in these nest eggs, and they’re not being replaced. Landlords who continue to operate do so in the face of increased costs, squeezed margins and growing regulatory scrutiny.”
London Evening Standard The Daily Telegraph
Tenants outnumbering available properties 10 to 1
New figures from trade body Propertymark reveal that more than 100 tenants are registering on average at each lettings agency branch, which is ten times the number of available properties. In March, the number of prospective tenants registering per branch reached 106, up from only 64 in December, which remains higher than the 95 prospective tenants registered per lettings agency branch in the same month last year. In addition, a total of 58% of lettings agents reported month-on-month increases in rents, suggesting that the pressure on rents is on the rise again. Nathan Emerson, of Propertymark, said: “The UK Government must urgently look to incentivise investment, including for build-to-rent, as the private rented sector could play a crucial part in solving the nation’s housing crisis. An increase in the supply of homes is the only long-term solution to unaffordability in the rental market.”
Daily Mail
Landlords favouring short-term holiday lets over long-term tenancies
The Times reports how an increasing number of landlords in the UK are choosing to rent their properties as short-term lets and holiday rentals, rather than offering long-term tenancies. Tax changes and a rise in the number of people holidaying in the UK are among the reasons behind the trend, with holiday-let firms seeing significant growth in the past few years. Short-term lets offer tax advantages and can provide higher rental incomes than standard long-term lettings. There are around 408,000 landlords in England, with an estimated 257,000 holiday-let properties, and the Government is proposing a register of all short-term lets in England to gain a better idea of the industry’s size, as well as potentially introducing the need for planning permission to convert a property into a holiday let.
The Times
More renters buying their first homes
The Telegraph reports how the rental market’s high costs and limited availability are pushing more renters to buy their first homes, helping to prevent a housing market crash in the UK. Despite a 4.6% slump in house prices from their peak in August, first-time buyers now represent the highest proportion of buyers on record, with 27.1% of property sales going to first-time buyers this year, up from 26.7% in 2022 and 23.8% in 2021. The terrible rental market is making buying more attractive, with rents on newly let properties surging by 8% in the past year, pushing many renters to accept higher prices. Meanwhile, landlords, facing higher mortgage rates, are leaving the market, while tenants are offering six to 12 months of rent in advance to secure new tenancies. The Government’s failure to build 300,000 homes a year has added further constraints to supply, leading to many renters opting for marathon mortgages of up to 40 years to bridge the gap between rising living costs and high property prices.
The Daily Telegraph
BUY TO LET
FCA proposes rules to allow leaseholders to reclaim lost insurance commissions
The Financial Conduct Authority (FCA) is proposing new rules that will allow buy-to-let landlords and flat owners to claim back billions of pounds lost in secret building insurance commissions. The rules will classify leaseholders as customers of buildings insurance, explicitly requiring insurance firms to act in their interests and banning them from recommending policies based on commission fees. Freeholders and managing agents have been charging commission fees of up to 62% on building insurance, with the average fee standing at nearly a third, according to the FCA. Previously, leaseholders only had a case to claim back commission charges if they were listed as “co-insured” on their lease, but the new rules will give all leaseholders the right to claim back commission fees.
The Daily Telegraph
COMMERCIAL
UK commercial real estate values rise
Commercial real estate values in the UK rose by 0.6% in March, marking the first gain since June 2022, according to the CBRE Monthly Index. The uptick in March failed to offset falls in January and February, with the result that capital values fell 0.3% over the first quarter. CBRE’s head of UK research, Jennet Siebrits, said that while the March results showed a modest upturn, it was too early to predict whether this signalled a recovery. Values in the retail sector climbed 1.1% in March, with retail warehouses up 1.8%, while office sector values fell 0.3% in March and 1.5% over the quarter. Industrial sector capital values increased 1.3% in March.
Daily Mail
AUCTION NEWS
Isle of Wight lots to go under the hammer
Clive Emson’s next auction will see a number of lots on the Isle of Wight go under the hammer. Property and land in Ventnor, Ryde, Wroxall and Godshill will be among more than 130 lots to appear at the auction, between May 2-4.
Isle of Wight County Press
Development opportunity in Derby set for auction
A chance to own four properties in a row in a Derby suburb comes up at auction next week. With a guide price of £1.8m, lot 23 is being advertised as providing “an excellent opportunity for a substantial development”, if planning permission is obtained. The properties are 441, 443, 445 and 447 Kedleston Road in Allestree and comprise of two “substantial” detached houses, a detached bungalow and a former builders yard, workshop and garage. The details provided by SDL Auctions add that they “offer the opportunity for improvement and extension subject to planning consent”.
Derby Telegraph
PROPERTY FINANCE
Property prices for first-time buyers reach record high
According to Rightmove’s house price index, the average price of a home for first-time buyers reached a record high of £224,963 this month, despite slower conditions in the wider housing market. The property portal found that sales volumes for properties typically favoured by first-time buyers were up 4% from March 2019, while homes a step up the ladder remained 4% behind 2019 levels, and top-end properties lagged behind by 3%. New sellers’ average asking prices increased by 0.2% to £366,247 in April, a slower pace than the typical 1.2% rise for this time of year. Demand for first-time properties, which typically have one or two bedrooms, was 11% higher than it had been four years ago, according to Rightmove. Demand was driven by rising rents, which made buying compelling for those who can raise a deposit and obtain a mortgage. Tim Bannister, the company’s head of data, said the figures portrayed a “multi-speed market” and that the hectic activity that had fuelled sales during the pandemic had faded. “Agents are reporting that many sellers have transitioned out of the frenzied, multi-bid market mindset of recent years and understand the new need to tempt spring buyers with a competitive price,” he said.
The Times
House price growth slows to 5.5%
House prices rose by 5.5% in the 12 months to February 2023, according to the Office for National Statistics (ONS), slowing from 6.5% in January 2023. The typical property value was £288,000 in February, an increase of £16,000 from the previous year, but £5,000 below the recent peak recorded in November 2022. The ONS said that annual house price growth in February 2023 was less than half the rate seen in July last year, when it was running at 14.4%. Average house prices increased over the 12 months to £308,000 (a 6.0% annual increase) in England, £215,000 in Wales (6.4%), £180,000 in Scotland (1.0%) and £175,000 in Northern Ireland (10.2%). Within England, the West Midlands recorded the highest annual percentage increase in house prices in February, at 8.6%, while London recorded the lowest increase, at 2.9%. London’s average house prices remain the most expensive of any region in the UK, with an average price of £532,000 in February 2023. Some 90,340 house sales were recorded in February 2023, which was 18.2% lower than February 2022 and 4.1% lower than in January 2023.
The Independent
LENDING CONDITIONS
Homeowners overpaying mortgages
Homeowners are overpaying their mortgages at a rate five times higher than last year, with over £4.1bn overpaid in January and February, a 21% increase from the same period in 2022, according to the Bank of England. This trend is due to rising mortgage rates that have increased in line with the Bank’s base rate, which has risen 11 times since December 2021, from a record low of 0.1% to 4.25%. Last year was a record year for overpayments, with more than £2 bn overpaid each month since September. The overpayments trend is expected to continue with an estimated 1.7m mortgage deals ending this year, and more two-year deals ending this summer. Overpaying can help reduce the term and total interest paid, and increase home equity. Martin Stewart from the mortgage broker London Money said: “There is definitely a trend, in London and the southeast particularly, of clients significantly reducing mortgage balances. We have even seen clients reduce or pay off mortgages by £500,000 to £1m.”
The Sunday Times
First-time buyers opting for marathon mortgages
First-time buyers and home movers are increasingly opting for marathon mortgages lasting up to 40 years, as a way to bridge the gap between rising living costs and high property prices, according to UK Finance. The number of first-time buyers taking out a mortgage of more than 35 years doubled in 2022 to 17%, while 38% chose terms of 30 to 35 years. Two-thirds of mortgages now have a maximum term of 40 years, up from around 50% four years ago. Housing experts suggested longer mortgages were making it possible for younger people to become homeowners, despite an expensive and limited private rental market. David Hollingworth, an associate director at the broker firm L&C Mortgages, cautioned: “It’s not healthy for borrowers to have to take longer and longer mortgages to try to afford a home. Ideally, the shorter the term, the better but buyers are looking for practical solutions to best manage their budget, and this can help.”
The Guardian
ECONOMY UK borrowing tipped to hit £23bn
A consensus forecast from City analysts suggests Government borrowing will have climbed to nearly £23bn in March. Office for National Statistics data due this week is expected to show the gap between what the government generates and what it spends on public services widened from the £16.7bn in February, with the increase attributed largely to the cost of support measures capping energy bills at £2,500. Analysts at consultancy Oxford Economics said borrowing has consistently come in below Office for Budget Responsibility (OBR) expectations over of the past six months, “reflecting a combination of resilient tax receipts and lower-than-expected costs of subsiding energy bills.” The report added: “The OBR’s full-year fiscal forecast is £152.4bn so, absent revisions and factoring in differences in the treatment of student loans, borrowing would need to have come in below £28.8bn in March to undershoot this forecast.”
City A.M.
