I hope you have had a great week. The first quarter of 2022 has just come to an end and for all of us at Track Capital, it has been a very strong start to the year.
Over the past few months, our team has really enjoyed exploring the UK, getting to know our developments firsthand and gaining a broader understanding of the various markets becoming prominent in the UK property investment scene.
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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
- Government Reform to Name and Shame Rogue Landlords – The government has revealed an aggressive multi-step approach to dealing with rogue landlords in the UK. The new plans are expected to deter landlords from cutting corners and put a clear emphasis on their responsibilities for tenant welfare. One of these new methods will involve “naming and shaming” non-compliant landlords on social media, which has never been implemented before. Another approach will be the formation of a Resident Panel, allowing tenants living in sub-standard housing with a lack of essential services to finally have a direct voice to the government. These plans have all been laid out in the government’s Social Housing White Paper, detailing the reforms designed to improve the standard of living for tenants in the Private Rental Sector up and down the country.
- UK House Prices Have Reached a 17-Year High – Nationwide has reported that house prices are now rising at over 14% a year, which is the highest annual growth rate in 17 years. This means that the average UK house price has now gone up by 21% in comparison to Q1 2020. Added to this drastic surge in house prices, UK citizens have also been struck by a general cost of living crisis affecting all major financial areas, with taxes, energy bills and food costs at an all-time high. It is undeniable that pockets are going to be feeling the pinch this year, especially as – big surprise – no mandatory wage increases appear to be on the cards to fight off the worst of it. However, despite a lack of cash flow up and down the country, the likelihood of a complete market crash remains relatively low so long as overall employment remains high. The reason for this is that mortgage payments are generally prioritised over other bills, making it likely that the number of mortgage defaults will remain marginal, so long as property owners stay in employment.
- UK House Price Growth Will Continue to Beat Inflation – It is only the end of Q1 2022 and already the economic and financial prospects for the majority of the UK are cause for serious concern. The latest ONS report has stated that household and transport cost hikes have been some of the biggest factors affecting the recent rise of the Consumer Prices Index measure of inflation, bringing it to a very sad 6.2% average. Nationwide’s data for February revealed that the average UK house is now valued at 260,230 – a staggering increase of £29,000 year-to-date, which pushes yearly growth to 12.6%. Despite all this, not everyone is feeling pessimistic about the future. One of the top five UK housebuilders, Bellway, has suggested that the impact of inflation will carry on being offset by the steadily rising house prices currently sweeping the UK. However, the chief executive at Bellway has conceded that rising costs must inevitably result in falling demand for property as prices are pushed far beyond what people are either willing or able to afford.
EPC Regulations – Are New Builds the BTL Future? – The UK government has told of its plans to implement a new minimum EPC level of C or above for buy-to-lets in the next five years. Their reasoning has been the product of a combination of factors, from combating the cost of living crisis to meeting their ambitious and controversial zero-emission targets. According to the Home Builders’ Federation, their study reveals that existing houses with ratings of C or over will enjoy an average saving of £435 per annum in energy costs. New build savings will be even higher, averaging £555 each year by comparison. With existing homes emitting approximately 2.38 tonnes more carbon than new builds every year despite being 7.4% smaller than newer properties, there is a strong argument for landlords to start buying new houses going forward, rather than paying to upgrade existing stock. Knowing of the government’s plans, UK new-build developers are already adapting their designs to incorporate new technologies, materials and regulations to make energy efficiency a top priority throughout construction.
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.