Hello,
I hope you have had a productive week. Here in the UK we have just finished another month of economically-impactful policy changes, from interest rate increases to stamp duty cuts and more.
With so much to examine and (as always) a hefty dose of media sensationalism, it is important that property investors act rather than react to the changing landscape of the UK real estate market. Now is a time of incredible potential.
Contact us to find out how you can benefit from these changes and avoid potential pitfalls along the way.
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.
Episode 46: From Real Estate Boom to Bust and Then Back Again – The latest episode of the Pure Property Podcast is out now. You can listen to it on Apple Podcasts and all other major platforms.
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Property News This Week
- Government Rental Reforms Slammed by Think-Tank – Experts at The Lettings Industry Council have released a scathing report in response to recent reform plans, highlighting the half-baked approach of the government which is failing to support either tenants or landlords. The team have warned that abolishing Section 21 without having a well-constructed new policy to take its place is likely to have a slew of negative consequences. They propose that fixed-term tenancies may help to resolve some issues that will arise, but that more needs to be done to keep the Private Rental Sector afloat. Their research suggests that nearly 60% of PRS properties will be lost as landlords sell under mounting pressure from untenable policy changes. The removal of fixed-term tenancies proposed has been heavily challenged, warning that the move will threaten security for both tenants and landlords, prejudicing applicants who require a guarantor.
- UK Supply-Demand Imbalance Reaching a Crisis Point – The specialist rental platform Ocasa has published data recently that reveals the true extent of Britain’s supply-demand crisis. According to Ocasa, the past three years have seen a decline of over 40% in rental stock, with only 134,000 now available – a loss of some 91,000 rentable homes.
This data is represented throughout the whole of the UK as no single region has escaped the loss. The North East of England has seen the biggest loss of rentable homes available, with numbers falling -57% since 2019, while England’s capital has lost -45% of its PRS stock in that time. The government’s apparent persecution of landlords with incessant regulation hoop-jumping has no doubt contributed to this crisis. Despite promises made, the government is still falling drastically short of its ambition to supply much-needed affordable homes to the UK, marginalizing those who, for financial or logistical reasons, may never be able to own their own home and with so much heavy competition, may now no longer be able to afford to rent either.
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Will New-Build Stock Levels Rise Due to Stamp Duty Cut? – Alliance Fund has published recent data suggesting that last week’s stamp duty cut could increase the delivery of new houses across England by 16% and up to 23% in London. Last week’s mini-budget announced the biggest cuts to tax seen in 50 years, with a doubling of the SDLT threshold to £250,000. First-time buyers can now claim 100% relief on properties worth up to £425,000. These changes represent a saving of £2,500 for the average buyer and first-time buyer. The data shows that during the government’s implementation of the stamp duty holiday between Q3 2020 and Q3 2021, a total of 220,530 new homes were completed in England, which was 16% more than those completed in the five quarters preceding the holiday. If this gives insight into what this type of tax cut can do during a pandemic, it is reasonable to presume that the new changes will again boost new-build stock levels across England.
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Need for Stock in London Presents Opportunity for Landlords – Research published by property agents SpareRoom and Benham & Reeve both revealed a drop in rent prices across London in Q3 2020 as the capital was rocked by the pandemic and people hurried to leave the city. However, now that restrictions have largely eased and life is returning to normal, people are growing more attracted to London and all its prospects for social and financial gain. The decline of WFH has pulled even more people back to the city, and as such, rental demand is growing swiftly. This change in motivation is currently warring with the housing shortage that is prevalent across England and especially London, causing rental prices to skyrocket as demand creates fierce competition for available stock. Savvy investors are keen to search for London rental properties now, while demand and rent are both at an all-time high and rarely-available yields for a property in our county’s capital are a very encouraging prospect.
That is all we have for you this week. If you have any comments or questions on this week’s news summary, please feel free to email us at [email protected] – if not, see you next week.