Weekly Property News Round Up – 11.12.22

Hello,

I hope you’ve had a productive week. As we approach the end of the year, we are excited to be offering our clients access to a host of incentives that are now available until January on our full range of properties.

With thousands of pounds of savings up for grabs and a unique opportunity to choose which incentive sounds best to you, there has never been a better time to invest.

Reply to this article today for more information.

Now, let’s take a look at all the headlines that caught our attention this week. I always try to summarise the links to save you from having to click through.

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Property News This Week

• Can New Builds Really Fill the Housing Supply Gap? – When faced with the current undersupply crisis sweeping the nation, it would be easy to assume that what the UK property market primarily needs is more new builds to bridge the gap and provide much-needed homes to a nation of waiting tenants. But how realistic is it to expect property developers to build so many houses that the competition among buyers disappears and prices are forced to take a nose-dive – only to then continue to build houses amid quickly-falling profits? With wages failing to keep up with inflation and the average house price now 9 times the average annual salary, a growing majority of the population may never qualify for either a mortgage or a private rented accommodation. Investing in social housing is the only option that makes any long-term sense – the very thing the government has spent the last 40 years stripping down to practically nothing. The question is; will they ever admit they got it wrong?

 

• Housing Minister Finally Admits to the Rental Sector Crisis – Since appearing at last month’s Levelling Up, Housing and Communities Committee, Housing minister Felicity Buchan has voiced concerns over the critical housing shortage currently holding UK renters in a vice. Writing to MPs, she described a reduction of households by a staggering 260,000 between 2020 and 2021 when compared with the 2016/17 numbers. Buchan’s comments have been welcomed by the NRLA, with Policy Director Chris Norris now hoping something will finally change after years of government persecution of private landlords with successive tax hikes that eat into yields and ultimately force landlords to raise rents in order to simply maintain a profit, or sell their properties to home buyers. In either case, thousands of renters are being left without adequate or affordable housing options in a crisis that is worsening by the day.

 

• Is the Property Market Crashing or Re-Balancing After Inflation? – With the impact of inflation finally starting to rear its ugly head after two years of skyrocketing house prices, many homeowners and landlords are starting to wonder if we are heading for a crash. Although a house price drop does seem inevitable in order to maintain prices within the realm of affordability, it is more likely that the market is simply re-balancing itself after a few years of uncontrollable – and unsustainable – growth. One factor that will save us from a housing recession is the government’s 2014 changes to the mortgage market, resulting in a reduction of interest-only mortgages. This means that borrowing is lower, with the majority of mortgage holders having already passed a higher interest rate stress test than the amount they currently pay. In addition to this, 30% of all UK buyers are cash-only and aren’t affected by mortgage rates at all. As always, it is better to look at your own personal circumstances before buying, rather than be guided alone by the ever-hungry media.

 

• London Paves the Way for More UK Rent Rises to Squeeze Tenants – In the latest rental market report published by Zoopla, it appears that London is continuing to pave the way for further rent rises across the UK. In a time of soaring inflation and low wages, this comes as devastating news to the many households already struggling to pay basic bills. The largest cities are undoubtedly at the head of this trend, making single earners more vulnerable than they have been in a decade. According to the report, a single earner now has to pay an average of 35% of their income on rent alone. In London, renters are having to pay around £273 more on rent every month than they did just a year ago. The average UK Rental annual growth has now reached 12%, which is twice the 6% growth in earnings. This fact alone demonstrates with utter clarity the difficulty faced by renters. It is therefore critical that private landlords consider the position they are putting households in before raising the rent any more than is absolutely necessary to maintain an acceptable profit.