Category: FEBRUARY 2024

Lettings agency Hamptons believe that rents have peaked.  Their latest data reveals some interesting trends in the rental market across Britain:

Slowing Rental Growth;
Average rents on newly let properties increased by 8.3% year-on-year in January, marking the slowest pace of growth in 13 months. This is also the first time in six months that rental growth has been in single digits.

Decreasing Percentage of Landlords Achieving Higher Rents;
In January, 59% of landlords achieved a higher rent when a new tenant moved in, down from a peak of 81% in January 2022 and 79% in January 2023.

Increase in Rental Homes on the Market;
There are currently 34% more rental homes on the market compared to the same time last year, although this is 43% fewer compared to the same period in 2019.

Regional Variations;
While eight out of eleven regions in Britain saw a slowdown in rental growth between August 2023 and January 2024, the most significant slowdown was observed in London, where annual rental growth more than halved.

Shift in Demand for Property Sizes;
The bulk of rent increases in 2022 and 2023 were driven by landlords of smaller homes due to higher demand for cheaper properties amidst a cost-of-living squeeze. However, in early 2024, similar increases are seen across all property sizes.

Landlords Securing Higher Rents;
Despite the slowdown, the share of landlords able to achieve higher rents remains above the pre-pandemic average, indicating that upward pressure on rents has not completely dissipated.

Future Outlook;
While rental growth is expected to weaken in 2024, wider pressures on landlords, such as reduced returns and additional costs stemming from rental reform, are likely to keep rental growth running ahead of inflation.

Overall, while rental growth is slowing, the rental market is expected to remain buoyant, with rents continuing to outpace inflation throughout 2024.

Typically, rents rise in line with wages – which, in turn, tend to track inflation or increase at a slightly lower rate. From the late 90s, when buy-to-let mortgages first became available, and the industry took off, up until the pandemic, that averaged out at around 2-3% a year.

Although the rate of growth is now coming down, rents will always rise over time, more-or-less in line with wage growth. And whenever there is an imbalance of supply and demand, that will tend to push rents up if rises are affordable.

For 2024, Zoopla anticipates a significant slowdown in rental growth as affordability impacts demand and supply improves slightly. London and other more expensive areas, where rents are highest, are expected to see the biggest drop, with annual growth in the capital predicted to be just 2% this year.

Source: Property Notify

A webinar poll undertaken by Countrywide Surveying Services (CSS), one of the leading suppliers of property risk management services, valuations and customer surveys in the UK has revealed that over a third of property professionals would like to see the reintroduction of Help to Buy or some government-led initiative announced in the upcoming Budget to help boost the new build sector and first-time buyer marketplace.

Breaking down the responses to the question – ‘What do you most want to see from the Chancellor in March’s Budget?’, 35% of respondents replied with Help to Buy or something to support new build and first-time buyers. 22% sought a stamp duty holiday/reduction, 17% opted for an inheritance tax cut, 16% chose stamp duty changes for downsizers and 10% elected for additional landlord support.

When evaluating the 2024 UK property market, 41% responded that there was cause for optimism, with the same proportion saying that there is ‘possibly’ cause for optimism. 13% stated that they were ‘unsure’ about the marketplace with 5% saying that there was ‘probably not’ any cause for optimism. However, on a brighter note, not one property professional in the audience suggested a definite ‘no’ cause for optimism for the UK property market in the next 12 months.

The third and final poll in the webinar focused on the General Election, the potential impact of a Labour victory and, if this were to happen, what the party’s housing-related priority might be.

Topping the responses for this question was the increased supply of social housing with 43% of the votes. This was followed by improved planning processes in local government to increase housing supply (13%), with making it viable for more FTBs to own their first home and increased tenant protection in terms of no-fault evictions both generating 11% of the responses. The options of preventing tenants living in sub-standard accommodation and making more empty properties available to live in both received 10% of the responses, with the removal of section 21 coming in at 2%.

These responses emerged at Countrywide Surveying Services’ regular webinar series which focused on what the future holds for the residential property market & surveying.

Anthony Codling of RBC Capital Markets provides an optimistic view of the current housing market for investors, highlighting the resilience of the market despite challenges.

Here’s a summary of his perspective:

1. Overview of Housing Transactions:
   – Housing transactions fell by 19% in 2023 to just over 1.02 million, slightly ahead of the forecast made at the start of the year.
   – Despite the volatility caused by factors like stamp duty holidays and the 2022 mini-budget, housing transaction volumes in 2023 were only 7.3% below their 15-year average.
2. Resilience and Outlook:
   – Codling acknowledges the unusual nature of the 2020s for the UK housing market but praises its resilience in the face of pressure.
   – Looking forward, he sees calmer seas and favourable winds for the market, suggesting a shift from survival to thriving in 2025.
3. Recent Trends and Challenges:
   – Data from HMRC shows a significant decrease in residential transactions toward the end of 2023, attributed to higher interest rates and a general sense of caution in response to the cost-of-living crisis.
   – Higher rates have made buying homes less attainable for many, resulting in an 18% year-on-year decline in transactions by December 2023.
4. Expectations and Predictions:
   – Tom Bill, head of UK residential research at Knight Frank, anticipates an improved outlook for the housing market, with leading indicators like prices, buyer registrations, and offers already picking up.
   – He expects transaction numbers to rise in the coming year as the impact of lower mortgage rates takes effect. Mortgage approvals are already increasing, and UK house prices are predicted to rise by 3% in 2024 as activity increases.
   – Bill suggests that a delayed general election would help momentum build in the housing market.

Architectural renovations: 

One of the most effective ways to increase the value of any residence is through architectural renovations. This can involve expanding the living space, adding unique architectural features, a guest house or self-contained apartment. Modernising property to your tastes and preferences is essential for a truly luxurious experience.

High-end interior design:

Thoughtful interior design can transform a house into a sophisticated and stylish home. Selecting premium materials, such as marble, granite and exotic woods for floors, countertops and fixtures can create a lavish atmosphere. Custom furniture and artwork can further emphasise the property’s exclusivity.

Source: Property Notify