Weekly Property News

‘Business as usual’ for the housing market as we head into spring.

UK housing market conditions continue to improve as we head into spring, as the uncertainty caused by the mini-Budget last autumn continues to subside.

The majority of UK buyers – 71% – surveyed last month said that they were confident that they would purchase a property within the next three months, compared to 69% in February.

The data provided by OnTheMarket (OTM) suggests remarkable resilience in the face of significant macro-economic turmoil; and despite considerable headwinds, the homebuying public is pressing on.

As well as an increase in confidence among buyers, the data also shows a small increase in confidence among sellers who were confident they would sell their property within the next three months in March (63% compared with 62% in February).

Naturally, there are some regional variations, with seller confidence in the East of England falling from 65% in February to 60% in March, while seller confidence also slipped in Wales, from 64% of sellers confident they would sell their properties in the next three months in February to 59% in March. However, in the Southeast, confidence rose with 64% of sellers confident of a sale within three months in March compared to 59% in February.

Nearly half of all properties – 45% – were SSTC within 30 days of first being advertised for sale in March, further underlining the upwards trends in confidence and positivity.

While this number is down on the same period last year, the market is very different as it continues to rebalance in a measured way. These numbers also suggest that it is returning to business as usual for UK prospective buyers, despite some negative reporting around pricing, according to OTM CEO, Jason Tebb.

He commented: “Average property prices have softened a little, although this is within the context of the value of the average home rising by ￡17,000 in the past year, according to the latest ONS/Land Registry figures, at a time when many predicted they would fall. Now that the stamp duty holiday is over and the cost of living has risen, prices aren’t rising in some regions, although we aren’t seeing a major nationwide correction, and the gradual rebalancing of the market does not seem to have dented confidence.

“The war on inflation continues and while it has ticked up again, the Bank of England’s Monetary Policy Committee is expecting it to halve by the end of the year.

“March’s Budget did not include anything to help first-time buyers, but equally there was nothing to dampen sentiment. Mortgage pricing has been volatile and with some of the bigger lenders reducing their five-year fixed-rate mortgages below the 4% barrier, this should reassure borrowers.

“Latest Bank of England figures on mortgage approvals show they are moving in the right direction, although they’re lower than the volumes seen during the height of the pandemic.

“On the whole, it seems to be more like business as usual for the market as we head into spring. As the sun makes a more regular appearance, more properties are coming to market looking their best, and there’s growing expectation as to what the next few months have in store. There is, however, still a need to be cautious; motivated sellers must not get carried away but be realistic in their pricing and listen to the advice of a professional local agent, particularly if they’re keen to sell within that magic 30-day window. With buyers and sellers seemingly increasingly confident, there is plenty to be positive about.”

BTL landlords could be left with little choice but to exit the market.

Almost two-thirds (59%) of landlords admit they might have to sell up if they were forced to make EPC upgrades, new research shows.

More than a quarter – 28% – of landlords said they were extremely concerned about the costs of upgrading their property and that it could not have come at a worse time.

A third – 34% – said it was quite likely they would sell their property instead of upgrading it one in three -30% – said they will potentially pass the cost of upgrading onto their tenants.

As private landlords await details and updates around the minimum energy efficiency standard (MEES) regulation, the research from Mortgage Advice Bureau shows that almost two-thirds of landlords would consider selling their property due to not being able to afford the changes needed to meet the minimum level.

With an expected deadline of 2028 for landlords to retrofit their properties to a minimum of an EPC C rating, there is a clear need for more clarity regarding the help that is available to landlords.

Currently, landlords must have a minimum energy efficiency rating of an E to be able to let a property out, with exemptions for those properties which would cost more than ï¿¡3,500 to retrofit to this level. It is expected that the government will announce a similar exemption for the new enhanced level, but with the additional cost involved to go from an EPC of E to C. This exemption is due to be set at ï¿¡10,000, with the average home expected to cost ï¿¡4,700 to retrofit to this level.

This leaves many landlords concerned and anxious about how they will afford these changes. According to the research, a quarter – 25% – said it was likely they wouldn’t be able to afford the changes, while a third (34%) said it was quite likely they would sell their property instead of upgrading it.

For others, it seems the potential upgrade bill will be passed onto tenants, with a third – 30% – saying they would do this in the future. A further 30% said they had already passed on bills for other upgrades to tenants.

With many landlords facing a hefty bill and a race against time, a fifth – 21% – of landlords are hoping that more help will become available to combat the cost of energy performance upgrades.

The government has placed a focus on retrofitting and renewable energy, with their recently expired ‘Green Home Grants’ and the newly announced ‘Great British Insulation Scheme’ (formally ECO+) to help improve the performance of the least energy efficient homes. However, there has been little in the way of policies, announcements, or clarity for landlords, leaving them confused about what upgrades will help.

A quarter – 26% – said they are planning on installing a smart meter to help hit a grade C, 25% would install LED lighting, while only 16% have sought the help and advice from a professional tradesperson to understand which changes would benefit them most.

Other, more proven methods to improve EPC ratings were less popular but are still being considered by landlords. Only 22% would consider installing a new modern boiler, and only a fifth (20%) would consider installing more insulation – a proven way of keeping heat in.

Almost a third (28%) said the cost of upgrading was extremely concerning and couldn’t have come at a worse time for them, considering the cost-of-living and interest rate increases which have squeezed the finances of many landlords. Although they did realise the need for the changes, 20% of those surveyed said it was an unfortunate but necessary spend, even though the cost was a concern. On the other hand, 32% said it was an unwelcome spend and a big worry of theirs.

Ben Thompson, deputy CEO of Mortgage Advice Bureau, said:?“The need for more efficient housing is obvious and has had a lot of focus placed on it in recent months. For renters, it means potentially lower utility bills, and for the UK’s climate goals, our leaky housing stock is a big barrier to getting to net-zero.

“However, for landlords, the proposed changes to upgrade to at least a C instead of the current E will mean they face having to foot large retrofitting bills. Our research shows just how confused and worried they are by this. Even if (as rumoured recently) the government delay the proposed deadline to 2028 for all rental properties, it isn’t long to find the money needed for the upgrades. This is especially challenging when considering the recent economic climate, which has seen mortgage rates increase and the cost of everyday items go up and up. There clearly needs to be more advice, guidance, and help for landlords.”

Stock shortages drive double digit rent rises, insists agency.

Hamptons says rental growth across Britain in March posted its third ever double-digit increase since the agency records began almost a decade ago.

Double-digit rental growth has previously only been recorded in May 2022, February 2023 and now March 2023.

In March, last month, the average rent for a newly let home reached ï¿¡1,236 per month.?This is 10.8 per cent or ï¿¡121pcm higher than the same month last year. March also saw the second fastest increase posted in any month after the 11.5 per cent increase in May 2022.

Rental growth continues to be led by London with average rents rising 16.2 per cent, faster than anywhere else in the country.??

Inner London saw rents rise 18.5 per cent over the last year to reach ï¿¡3,046, with rents surpassing the ï¿¡3,000 mark for just the second month running.??

Meanwhile the 15.6 per cent growth posted in Outer London marks the fastest annual increase on record and takes average rents here to ï¿¡2,013 per month.

Scotland continues to bear the brunt of the rental stock shortage, with the number of homes on the market down 39 per cent year-on-year, more than in any other region by at least 10 percentage points.

Aneisha Beveridge, research chief at Hamptons, says: “While house price growth continues to slow, rents keep moving in the opposite direction.??

“Tenants find themselves with a little more choice than they did last year, which has been reflected in a 10 per cent increase in the number of tenants moving home.??

“However, the number of rental homes on the market seems to have found a new normal at nearly two-thirds below pre-pandemic levels.”

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Short Lets Clampdown: Airbnb warns against over-the-top measures.

Airbnb is warning the UK government not to be heavy handed in its planning controls restricting the short lets sector.

At the end of last week, the Department for Levelling Up Housing and Communities launched a formal consultation that planning consent would be required for an existing home to be used as a short let.

The government consultation includes another option - whether to give owners flexibility to let their home for up to a specified number of nights in a calendar year without the need for planning permission.

Subject to the outcome of the consultation, the planning changes would be introduced through secondary legislation later in the year and would apply in England only.

Meanwhile another government division - the Department for Culture Media and Sport - has launched a separate consultation proposing a new mandatory registration scheme for short lets.

But AirBnb is not so keen on at least one of the new proposals.

Theo Lomas, Airbnb’s head of public policy in Northern Europe, says:?“Airbnb has long called for a national register for short-term lets and we welcome the government taking this forward.?

“We know that registers are clear and simple for everyday Hosts to follow while giving authorities the information they need to regulate effectively.?

“The vast majority of UK Hosts share one home, and almost four in 10 say the earnings help them afford the rising cost of living.?

“We want to work with the government to ensure that any planning interventions are carefully considered, evidence-based, and strike a balance between protecting housing and supporting everyday families who let their space to help afford their home and keep pace with rising living costs.”

The new trade body for short lets has also opposed the planning proposal.

Andy Fenner, chief executive of the Short-Term Accommodation Association, says: “Introducing a planning permission requirement completely ignores the contribution short-term rentals make to the economy.?

“Many thousands of small businesses will be affected by these changes if the government sees them through.”

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