I hope you have had a great week. Despite the media storm surrounding the cost of living crisis and rising interest rates, we have added a host of truly exceptional investment opportunities to our portfolio this year and have helped many investors navigate the mortgage market to secure them excellent income-generating assets.
If you are interested in finding ways to stay ahead of the current property market trends, reply to this article to see how we can help you.
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
- Why is Build to Rent the Next Big Thing for Investors? – In this time of great economic uncertainty, people have been searching for the safest way to protect and grow their money. With the value of cash decreasing, cryptocurrency crashing and stocks experiencing global instability, the housing market appears to be one of the only remaining options that has miraculously held its corner in the investment arena. While house prices have shown continued growth over the last 30 years, being on average 6 times higher than they were in 1992, the BTL sector has taken repeated hits and available stock is at an all-time low. In fact, 60% of investors recently surveyed have declared a loss of faith in the BTL strategy. So what is the next option when investing in real estate?
Investors are now turning towards the Build-To-Rent (BTR) market, where high-quality properties in rental hotspots are being intentionally developed with renting in mind, such as blocks of rental flats and large-scale housing developments. The BTR market is set to explode in the next 5 years as demand grows among both tenants and investors.
- Government Receives Heavy Criticism for PRS Strategy – Earlier this year, Michael Gove caused distention among property experts with his controversial suggestion that the shrinkage of the PRS would lead to more people becoming homeowners. This short-sighted thinking was just more evidence of the government’s campaign of discouragement of the Private Rental Sector that has been squeezing the throats of landlords since 2015. There is no doubt that this has all been deliberate, with measures such as BTL mortgage restrictions, the introduction of a 3% Stamp Duty levy on rental homes and increasingly costly regulations with ostensibly minimal support for landlords all designed to decrease profit margins and cause many landlords to exit the sector. The NRLA has blasted the government for failing the PRS sector and the families who rely on it, as reports suggest that the Chancellor may also be increasing Capital Gains Tax in his Autumn Statement. This move would further reduce profit margins within a sector that is absolutely crucial for providing homes to UK citizens who no longer have access to social housing.
- Why Jeremy Hunt Should Support the New Homes Market – Jeremy Hunt has received criticism from the Managing Director of Hampshire-based premium housebuilder Bargate Homes over his lack of support for the development of new homes on the market. The Director of Bargate Homes anticipates widespread disappointment to follow Thursday’s Autumn Statement, citing little support for new home building and a lack of focus on fixing the planning system which has caused disruption in property developments nationwide, as well as a lack of emphasis on solving the growing soil nutrient deficiency issue. With consumer confidence at an all-time low, Jeremy Hunt needs to take a clear and proactive stance on these key issues in order to boost market activity. While the new first-time buyer Stamp Duty exemption threshold will likely provide a boost in this area, no adequate replacement for the Help to Buy scheme has been introduced, which will inevitably lead to a huge gap in the new-buyer market in the months to come.
- House Prices Predicted to Drop by 9% by Q3 Next Year – The Office for Budget Responsibility has just released its Autumn Statement, which predicts a drop of 9% in house prices within the next two years. The OBR, which is responsible for monitoring the government’s own finances, has suggested that the drop will occur sometime between Q4 2022 and Q3 2024 as the effect of inflation and rising mortgage raise put a significant squeeze on UK households. The result will be a year-long economic recession as the country restabilises. The report suggests that average interest rates on the stock of outstanding mortgages will reach a height of 5% in H2 2024, which is the highest rate recorded in 15 years, before dropping to 4.6% by 2027. Recent economic volatility has cast an air of uncertainty over forecasts of this nature and the report acknowledges this, since mortgage rates, interest rates and bond yields have fluctuated dramatically over the past year, and all have a knock-on effect on the mortgage market.