I hope you are enjoying a relaxing bank holiday weekend and catching some of the beautiful sunshine we’ve been lucky enough to receive!
We have been speaking to our investors and despite the market being white-hot, the overall outlook has been resoundingly positive, backed by a strong sense of confidence in the future of the UK real estate sector.
We are very interested to hear your thoughts on what the UK property market will look like a year from now, so please reply to this post to give us your perspective on what has been happening over the past year and where it’s all going.
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
- HMRC Cracks Down Hard on Foreign Tax Evaders – The accountancy company UHY Hacker Young has recently shared data showing that a growing number of overseas investors are opting to divulge details previously not shared with the HMRC in regards to their earnings. According to its report, confessions of overseas tax evasion have increased four-fold year to date. This comes as the HMRC have collated and taken action over a shocking slew of information from a variety of avenues. Using sources such as PurpleBricks, Openrent and overseas tax authorities, the HMRC is identifying and tracking overseas individuals suspected to be engaging in tax evasion. The HMRC has been sending out notices to relevant individuals prompting them to declare their true taxable earnings or risk criminal prosecution or penalties for evasions that could be up to 200% of the tax owed.
- Why Real Estate is One of the UK’s Safest Industries – In the past few years, the global economy has taken a huge hit, forcing many financial markets to hit a rough patch. This includes the likes of the NASDAQ 100 and the S&P 500, which have both taken a significant nose-dive in the past 12 months. Compared with this uncomfortable volatility, the UK real estate market has enjoyed a long period of steady growth, which is strengthening with each passing year. This is particularly true in today’s climate of extreme supply-demand imbalance, which has played a major role in the exponential growth of house prices since 2020. The UK is now currently experiencing a shortfall of new homes which has resulted in a requirement of 340,000 new homes a year until 2031 in order to fulfil the nationwide demand. Ironically, the UK has also lost an average of 24,000 social homes since 1991, which has fostered an increased demand for private rented accommodation, helping to send prices soaring as tenants compete for what little is left available. Looking back, it is difficult to conceive that there has been an increase of 20% in the average house price in the UK since 2020 alone.
- UK Landlords Sell for Capital at Expense of Renters – Property giant Rightmove has released data showing an 11% price rise in rented accommodation in the past year. This huge uptick is the result of a variety of factors, such as a shortfall in new builds as supply chains broke down during the pandemic, an undersupply of existing housing and the mass exit of BTL landlords who have given up jumping through government-inflicted hoops and have opted instead to take advantage of the UK house price growth – by selling their BTL properties. The systemic lack of supply has driven renters up and down the country into fierce competition with each other, being forced to pay the very most they can possibly afford to secure a home. In order to reverse some of this damage, it is important that the UK government shows a more developed understanding of the crucial role private landlords play in filling the drastic shortfall left by diminishing social housing. Cuts to tax relief on buy-to-let mortgage interest payments and plans for a mandatory EPC rating of C or over in the future seem intentionally designed to destroy what is left of landlords’ profit margins.
Average Rents Grow by 10% in UK for the First Time in History – As the UK housing market continues to hurtle through this period of incredible highs and shocking lows, the supply-demand imbalance for rented properties continues to grow, resulting in record average rental prices across Great Britain. Looking back to this time last year, demand for rented accommodation has grown by 6%, in stark contrast with the 50% fewer properties available to meet it. The Director of property data at Rightmove has revealed that in the first quarter of 2022 alone, tenant demand has gone past the highest point it reached last year. The competition this has caused for quality housing is now severe, with nothing on the horizon to suggest any change. With this demand comes rising rents, as the UK rent growth has now hit a national average of 10% year on year. This has had a devastating effect on many people’s lives that will only be remedied by true governmental support to this ailing sector, combined with a heavy injection of investment cash flow to help the most in-need areas of the UK.
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.