The latest quarterly rental market Hometrack report shows that average UK rents (excluding London) have jumped up by 2.3% in 2020 which is up from 1.6% annual growth in the previous quarter. The rental growth is underpinned by the continued rise in demand and constrained supply. Demand is up 21% year on year in January and at the same time, the supply of homes available to let fell by 11% over the same period.
We are going to be talking about the rental market next week on our podcast so tune in if you want to hear more about how it is currently performing and our predictions on what the landscape might look like in the future rental market.
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.
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- ‘Largest-ever’ investment announced to remove unsafe cladding – On Wednesday, Housing Minister Robert Jenrick provided some positive news for the cladding saga by announcing the UK Government’s further plans to remove unsafe cladding by investing an additional £3.5 billion. He has promised that the funding will ensure leaseholders in England in high-rise buildings above 18 metres will bear no costs in order to make them safe. With the cost to leaseholders in lower and medium-rise blocks of flats potentially still being significant, he announced the UK Government will develop a long-term low-interest scheme to protect leaseholders for cladding remediation in buildings between four and six stories high to help tackle this issue so leaseholders will not pay more than £50 a month towards the removal of unsafe cladding. In November 2020, the government announced that the EWS1 form is no longer required for owners of flats in buildings without cladding to sell, rent, or re-mortgage a property and they are asking lenders to strongly support this and Wednesdays decision to help the market move forward. There are many people that have been affected by this at no fault of their own and I am really pleased to see this moving forward in the right direction.
- UK new build house prices surge 48% since 2015 – According to HouseScan, new build homes continue to be seen as a good investment opportunity. HouseScan founder Harry Yates noted that “despite the problematic landscape created due to COVID-19, the new build market remains a strong investment for UK homeowners, with values continuing to not only climb but doing so at a far greater rate than existing bricks and mortar”. Their research found that new build property prices overall across the UK have jumped 27% since 2015, outpacing the 20% increase seen across the regular market. Yates went on to say that “While an initial investment in a new build property will require homebuyers to pay a premium, it’s worth every penny in the long term”.
- Two new property taxes announced by Housing Secretary – The first article was about how the government is going to financially support those affected by the cladding issue and this article is about how they are aiming to pay for it. The government has given details of two new taxes to provide funds to address the cladding problem with the first being called a Gateway 2 developer levy. This will be targeted and apply when developers seek permission to develop certain high-rise buildings in England. The second will be a new tax for the entire UK residential property development sector and will raise at least £2 billion over a decade. A statement from the Ministry of Housing Communities and Local Government said “The tax will ensure that the largest property developers make a fair contribution to the remediation programme, reflecting the benefit they will derive from restoring confidence to the UK housing market. The government will consult on the policy design in due course”. This is good that the developers are going to be taxed and not purchasers but the question will be if the developer will then pass this cost on to them in some shape or form?
- Britain losing reputation as home-owning nation as more than third of population renting – This is something I mentioned last week in the BTR article as I said it seemed the trend was switching to a more European style of renting over buying. The number of owner-occupied properties has fallen from 66% to 64% of the market in the past 10 years with rising prices being one of the reasons as people (mainly young adults) struggle to get on the housing ladder. You might think 2% is not a massive drop but to put that into context, that is around 2.3 million people renting rather than owning their home. It would also seem the trend is shifting to people preferring the freedom that renting provides as it enables them to live in areas they could not otherwise afford to live in and they are not stuck in one place either giving more flexibility. It also means that more rental stock is going to be needed to meet the demand which I suppose is good news for landlords and investors.
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.