UK Property Market: The Autumn Outlook for Investors in 2024

As we head into the autumn of 2024, the UK property market is facing a unique set of challenges and opportunities for investors. From evolving legislation to shifting market dynamics, this season could significantly impact your investment strategy. Here’s a current look at the key factors that could shape your property portfolio in the coming months.

1. Landlords Selling Up Due to Market Conditions

Recent reports indicate that some landlords are choosing to sell their properties, citing difficulties in maintaining profitability due to rising interest rates, increased regulation, and a tightening rental market. This trend could lead to a shift in the market dynamics, offering potential opportunities for investors looking to expand their portfolios. However, it also raises questions about the long-term sustainability of buy-to-let investments in certain regions.

2. Demand Outstripping Supply: Rental Stock Shortage

One of the prevailing trends this autumn is the continued shortage of rental properties. The imbalance between supply and demand has driven rents higher, particularly in urban areas. This presents a dual-edged sword: while it means higher rental yields for existing landlords, it also makes it harder for tenants to find affordable housing. Investors should be mindful of this dynamic when setting rental rates and consider how it might influence tenant retention.

3. Mortgage Rates and Financing Challenges

The ongoing rise in interest rates has made financing more expensive, affecting both new investors and those looking to remortgage. Lenders have become more cautious, often requiring larger deposits and stricter affordability checks. For investors, this means a careful evaluation of financing options is essential to ensure that properties remain cash-flow positive in a higher-rate environment.

4. Regional Shifts in Investment Hotspots

While London has traditionally been the focus of property investment, regional cities like Manchester, Birmingham, and Bristol continue to attract attention due to their relative affordability and strong rental demand. Investors are increasingly looking beyond the capital for higher yields and growth potential. This autumn, keep an eye on regional markets that offer a balanced mix of affordability, rental demand, and growth prospects.

5. Energy Efficiency Regulations

New energy efficiency regulations set to come into effect soon will require rental properties to meet higher standards. Properties with low energy performance certificates (EPCs) may need costly upgrades to remain legally rentable. Savvy investors are already factoring in these potential costs when evaluating new acquisitions or making improvements to their existing properties. This presents an opportunity to future-proof investments by focusing on energy-efficient homes that align with upcoming regulations.

---

Strategic Takeaways for Investors This Autumn

• Evaluate Portfolio Sustainability: With increased regulation and market pressures, consider reviewing your portfolio to ensure it remains profitable and compliant with upcoming legislation.
• Adapt to Financing Changes: If you're looking to expand or refinance, stay updated on mortgage trends and explore different financing options to maintain cash flow.
• Explore Regional Markets: Diversifying into emerging hotspots can offer better yields and growth potential compared to more saturated markets.
• Plan for Energy Upgrades: Be proactive about improving the energy efficiency of your properties to meet future regulatory requirements.

---

Staying ahead of these autumn trends will help you make informed decisions, ensuring that your property investments continue to thrive in a changing market landscape.

The Renters' Rights Bill: What Every UK Landlord Needs to Know Now

The UK rental market is on the brink of significant change with the proposed Renters' Rights Bill. This reform aims to address long-standing concerns about tenant security and housing standards, but what does it mean for landlords? Let's dive into the key elements of the bill and its potential impact on your property investment strategy.

1. Ban on "No-Fault" Evictions

One of the most significant changes proposed is the ban on "no-fault" evictions (Section 21). While this move aims to provide tenants with greater security, it shifts the power dynamic in the rental market. Landlords will need to provide "robust grounds" for eviction, which could lead to more stringent tenancy agreements and an increased likelihood of legal disputes.

2. Introducing Awaab’s Law to the Private Sector

The bill extends Awaab's Law, requiring landlords to address serious hazards like damp and mold promptly. Failure to comply could result in fines up to £7,000. This means landlords must be more proactive in property maintenance to avoid legal and financial repercussions.

3. The Decent Homes Standard

For the first time, the Decent Homes Standard will apply to the private rented sector. Landlords will be required to ensure properties meet a minimum standard, including adequate heating and insulation. This could mean upfront costs for property improvements, but it also presents an opportunity to attract quality tenants and reduce long-term vacancy rates.

4. In-Tenancy Rent Increase Restrictions

The bill proposes a cap on in-tenancy rent increases, aligning rent adjustments with inflation rather than market rates. While this aims to protect tenants from sudden rent hikes, it could also limit landlords' ability to respond to market changes. It’s crucial to consider how this may affect your rental income strategy over the long term.

5. Abolition of Blanket Bans on Certain Tenants

Landlords will no longer be able to implement blanket bans on tenants with children or those receiving benefits. This move ensures fair access to housing but may require landlords to adjust their risk assessments and screening processes.

---

What’s Next for Landlords?

The Renters' Rights Bill is still under review, with adjustments likely before it becomes law. However, its current form signals a shift toward a more regulated and tenant-friendly market. Landlords need to stay informed, review their property portfolios, and adapt their strategies to navigate this evolving landscape.

---

UK house prices remain subdued for third successive month

Sales average £288,455 in June but recent cuts in mortgage rates offer hope for market, says Halifax

House prices have remained “subdued” for a third month in a row, according to a leading lender, but a recent run of mortgage rate reductions is offering hopes of improvement in the market.

The average house price hit £288,455 in June, Halifax reported, down only 0.2% on the £288,931 recorded in May, as a shortage of properties kept prices high. House price growth on an annual basis remained unchanged at 1.6%.

The latest figures from the mortgage lender – which cover much of the election campaign – mark the third consecutive month that house prices have stayed relatively flat.

UK house prices still unaffordable for many people, says Nationwide

Read more

Amanda Bryden, the Halifax’s head of mortgages, said house prices had posted a seventh consecutive month of year-on-year growth.“This continued stability in house prices – rising by just 0.4% so far this year – reflects a market that remains subdued, though overall activity has been recovering.

“For now, it’s the shortage of available properties, rather than demand from buyers, that continues to underpin higher prices.”

She said that mortgage affordability remained the biggest challenge for new homebuyers, as well as those coming to the end of deals.

However, the prospect of the Bank of England cutting interest rates in August or September has led to a flurry of mortgage reductions this week, offering some relief to buyers and borrowers and stoking hopes of an improved picture later this year.

Earlier this week, Barclays announced that it would cut a selection of its fixed-rate mortgages by 0.27 percentage points, while Halifax lowered rates by 0.19 points and Santander cut rates by 0.16 points on Thursday.

Leeds Building Society announced that on Monday it would cut its residential mortgage rates by up to 0.15 percentage points.

Mark Harris, the chief executive of the mortgage broker SPF Private Clients, said: “With the big five lenders – Barclays, HSBC, Santander, Halifax and NatWest – reducing their mortgage rates this week, lenders continue to jostle for business as they ramp up the summer sales.”

He added said: “Those lenders who haven’t yet repriced are likely to follow suit, as long as service levels allow, which is welcome news for hard-pressed borrowers.”

Analysis by Rightmove published last month found that monthly mortgage costs for first-time buyers had increased by more than 60% since the 2019 general election. It said the average monthly mortgage payments for a typical first-time buyer was now £1,075 a month, up from £667 in 2019.

Bryden said that she expected mortgage costs to ease gradually through a combination of lower interest rates, rising incomes and more restrained growth in house prices.

Full story : https://www.theguardian.com/business/article/2024/jul/05/uk-house-prices-remain-subdued-for-third-successive-month

Will Starmer Respond? Activists Urgently Demand Rent Controls

In a blog released within minutes of Sir Kier Starmer becoming Prime Minister, activist group Generation Rent calls for rent controls.

It says: “In order to be effective, we believe the new government must limit the rent increases landlords can impose to tenants stay put, rather than continue to allow landlords to push rents up faster than tenants’ wages.”

The activists also want to stiffen Labour’s policies on so-called bidding wars.

Starmer spoke in broad terms during the election campaign about giving tenants the right to challenge ‘high’ rent rises, and stopping agents and landlords from effectively auctioning tenancies to the highest bidder.

But Generation Rent’s blog states: “While plans to challenge increases are welcome and bidding wars must be outlawed, any system that would allow tenants to offer so-called ‘voluntary’ offers over asking prices would undoubtedly be exploited by some landlords and letting agents to allow back-door bidding wars.”

The other Labour policies about which the group is not quibbling so far include: 

- “Immediately” abolishing Section 21 no-fault evictions;

- raising standards, including extending Awaab’s Law to the private rented sector and ensure homes meet Minimum Energy Efficiency Standards – a week after the manifesto launch, Labour committed to making sure privately rented homes have an Energy Efficiency Rating of at least ‘C’ by 2030;

- giving first-time buyers ‘first dibs’ to buy homes instead of international investors, and a permanent, comprehensive mortgage guarantee scheme, to support first-time buyers who struggle to save for a large deposit, with lower mortgage costs;

- a housebuilding target of 1.5m over five years, equivalent to 300,000 per year;

- review Right to Buy discounts and protect newly-built social housing. 

Generation Rent says that “Labour’s promises offer many welcome steps in the right direction, with many measures desperately needed in the context of record homelessness and the cost of renting crisis.”

For full info see : https://www.landlordtoday.co.uk/breaking-news/2024/7/activists-demand-immediate-rent-controls-from-starmer-government

Government considers introducing 1% mortgage

The government is considering introducing a 1% deposit mortgage scheme as part of Chancellor Jeremy Hunt’s upcoming March Budget, The Independent reports.

It’s typical for lenders to require a 10% deposit, while some mortgages with 5% deposits are also available.

It’s thought introducing such a product would help the Conservatives attract younger voters ahead of the next general election, which is likely to take place this year.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “99% mortgages could be a good idea in the appropriate circumstances.

“With added stamp duty costs, a 99 per cent mortgage can look identical to a 95% mortgage for previous generations. Add in the fact that saving for a deposit while renting is practically impossible, this could be a solution.

“There are negatives to consider of course, such as finding yourself in negative equity if house prices were to fall. This would only become relevant if you needed to move but assuming gradual house price inflation and a repayment mortgage where you chip away at the balance each month, equity will be gradually created over time, reducing the loan-to-value.

“There are 100% mortgages available today – for example, Skipton Track Record, which uses the evidence of long-term rent payments as part of its affordability basis and assessment. Also, Barclays Springboard, albeit using equity in a guarantor’s house, so net loan-to-value is lower.

“Unlike 100% mortgages in the past, lenders now have more stringent assessments to perform to assess affordability and stressing. There is less risk of borrowers over-stretching themselves.

“Naysayers will no doubt focus on the fact this is a policy to increase demand for housing not supply so inevitably the effect on house prices will be upwards.”

.23RD JANUARY 2024 ADVISER NEWS, BUY TO LET, PROPERTY NEWS, UK

BY RYAN BEMBRIDGE

https://www.propertywire.com/adviser-news/buy-to-let/one-in-four-property-insurance-claims-come-from-storm-damage/

SHARE THIS POST:  

Daylight Robbery? Council’s 60 per cent rise in fees on landlords

Landlords who fail to ensure their private rented homes meet required standards face massively increased charges from a council.

Bath & North East Somerset council has hiked the fee for serving a formal Improvement Notice from £250 to £400 - a whopping 60 per cent rise. 

The fee is charged when the council’s Housing Services team issues an Improvement Notice to address health and safety hazards in houses or flats. These could be property defects, such as absent or defective fire precautions, inadequate heating and insulation, or severe damp and mould.

Councillor Matt McCabe, cabinet member for Built Environment and Sustainable Development, says: “The majority of landlords run their properties responsibly, but the standard of rented homes across B&NES is inconsistent. Our Housing Services Team work hard to ensure that landlords act responsibly and renters have a safe and secure home. 

“We follow government guidance on setting the fees at a level that ensures the council recovers reasonable costs including the cost of taking enforcement action if necessary and for any staff time and expenses incurred.”

Other charges that have been increased include the fee for an HMO licence, which has risen from £795 to £995; and certain fees charged to Registered Providers for the marketing and delivery of affordable homes.

By Graham Norwood of Landlord Today

https://www.landlordtoday.co.uk/breaking-news/2024/1/daylight-robbery-councils-60-per-cent-rise-in-fees-on-landlords