As you can probably imagine, this week has mainly been focused on the Chancellor’s Spring Budget and in case you missed it, you can catch the key points here. I won’t go over what was announced for the property market here as it will be covered in one of the articles below.
If you do have any questions about what the Spring Budget means for the property market then please send us an email at [email protected] and a member of the team will get in touch to go over it all.
Now, let’s take a look at the headlines that caught our attention this week, I always try to summarise the links to save you having to click through.
- What does the Spring Budget mean for the property market? – I thought it would be best to start with the most talked-about thing this week, the Spring Budget. This article is from Rightmove and outlines the stamp duty extension and the 95% mortgage guarantee scheme along with what some industry experts say. Firstly, the stamp duty holiday extension has been extended by three months if buying a home up to the value of £500,000 and then the extension is applicable until the end of September 2021 when purchasing a property with a value up to £250,000. This will be a relief to some buyers and sellers that were at risk of missing the original deadline date of 31st March. This is a boost for the property market and is sure to keep prices moving in a positive direction. Next, the mortgage guarantee scheme is a 95% loan to value (LTV) mortgage guarantee scheme to help buyers with small deposits get on the property ladder. Due to low-deposit mortgages largely being withdrawn by lenders during the coronavirus pandemic many first-time buyers have faced raising deposits of 15-20% in order to secure a loan so the Treasury has said it will guarantee parts of the loans on properties worth up to £600,000 in order to encourage lenders to reintroduce low-deposit mortgages and make it easier for buyers with low deposit levels to buy. The Chancellor said many of the big lenders, including Santander, Lloyds, Barclays and HSBC are backing the scheme and will be offering “government guaranteed” mortgages from next month. This is going to help the property market continue its momentum but I do wonder if it will cause prices to ultimately creep up and continue to still keep some buyers out of the market.
- More Student Accommodation May Be Needed as University Numbers up 200,000 Over the Last Five Years – The UK’s leading student accommodation platform, UniHomes, has revealed that an increasing amount of people are choosing to go to university which means the demand for student accommodation is higher than ever. The total number of students across the UK opting to pursue higher education has increased by 9% with nearly 200,000 more heading to university each year. With 107,000 less rental homes across the UK market since 2016 and only 660,000 purpose-built student accommodation homes available, there is a clear need for more PBSA. Co-Founder of UniHomes, Phil Greaves, said: “Rental affordability is already an issue for many at university and the cost of renting is the largest outgoing that many students struggle to cover. Should stock levels continue to decline while demand increases, the cost of renting is likely to climb higher, causing rents to increase as well”. So effectively, we desperately need more PBSA schemes to be built to help keep up with demand.
- Nationwide: Average house prices reach highest on record – Last week we had Hometrack’s house price index report that showed annual UK prices were up +4.3% and now it looks like Nationwide are singing a similar tune by reporting that average house prices in February have reached the highest figure on record at £231,061. Their latest figures show that house prices have risen by 6.9% year on year. That is a stark contrast to their prediction back in December that the property market would slow “sharply” over the next few months. Robert Gardner, the chief economist at Nationwide has said: “This increase is a surprise”. With the Chancellor’s Spring Budget announcement extending the stamp duty holiday and announcing 95% government-backed mortgages, I can see prices remaining strong and further proving their December predictions wrong.
- Rent slump in London sees ‘record drops’ says latest HomeLet report – There are always two sides to every story and in the case of how the Covid pandemic has affected the rental market this is certainly the case. HomeLet, which says its index is the most comprehensive measure of rents in the UK, says rents outside London have shot up by 6.2% pushing the average rent up by £151 a month to £840 per tenancy however rents in the capital dropped by 4.7% over the same period which is the highest rate of decline ever seen. With the city partly shut down due to the pandemic, there has been a mass exodus of the 20-something-year-olds from the capital, many of whom has chosen to return to their parents to work from home which is a big factor driving down rents rapidly. One tenant that The Negotiator talked to, who wished to remain anonymous, said they had secured a two-bedroom flat in North London for £1,650 a month that had previously been rented for just shy of £2,000. Worrying as this sounds for London landlords, I personally believe that once the capital gets back to full normality there will be a surge of demand back into the city and the rental market will pick back up.
That is all we have for you this week. If you have any comments or questions on this week’s news summary then please feel free to send us an email at [email protected] – if not, see you next week.