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Writer's pictureMaverick P.

UK Property News Week 15

Updated: Jun 23

Welcome to NestInsights, where we investigate the currents shaping the UK property market. Our focus extends across a spectrum of issues and developments that are pivotal to understanding the dynamics at play within the property sector.


In our latest edition, we explore the concerns over mortgage payments to the transformative trends in single family housing rentals, along with significant policy changes and market reactions to fluctuating economic indicators. Each segment is tailored to provide our readers with a nuanced understanding of the forces shaping property investment and market trajectories.


Our goal is to offer a comprehensive overview that informs and empowers our audience to make informed decisions in a dynamic market.


Table of Contents


  • Survey Reveals One in Three Concerned Over Mortgage Payments

  • Report Highlights England's Unique Approach to Tenant Treatment

  • Halifax House Price Index Sees Decrease in March Figures: Industry Feedback

  • Labour Suggests Implementation of New Property Tax

  • Notable Expansion in the Single Family Housing Rental Sector

  • Projected Increase in Gross Mortgage Lending for 2024

UK Property News Week 15


Side of a white house with shutters and a black-tiled roof

Survey Reveals One in Three Concerned Over Mortgage Payments


Recent data from Clifton Private Finance underscores the growing apprehension among UK homeowners regarding their ability to keep up with mortgage payments. A survey conducted by the firm, spanning from November to March 2024, reveals that one in three participants are worried about their ability to meet mortgage obligations.


This concern is rooted in a backdrop of fluctuating interest rates and the transitioning financial landscape.


The survey, which gathered insights from over 500 respondents, highlighted a cautious optimism about interest rates remaining stable or improving, yet the reality for many remains challenging.

The analysis indicates that many individuals are coming off two-year fixed-rate mortgages and encountering significant increases in their repayment amounts. This adjustment period is proving difficult for a substantial portion of homeowners, with the anticipation that although the spikes in payment amounts may stabilize over time, the immediate future holds considerable financial strain.


Given these findings, the sentiment in the property market reflects a cautious outlook. Homeowners and potential buyers are navigating a landscape where financial stability is not guaranteed, and the ability to sustain mortgage payments is a pressing concern for many.



Report Highlights England’s Unique Approach to Tenant Treatment


England's approach to rental protections and tenant rights stands out significantly compared to other countries, particularly those with a stronger tradition of long-term renting. A comprehensive report from the Social Market Foundation has highlighted these differences, shedding light on the inadequacies and challenges faced by renters in England.


The private rental sector in England has seen substantial growth, yet it remains less attractive compared to long-term renting scenarios common in other parts of Europe such as Germany, the Netherlands, and Denmark.


These countries offer greater security of tenure, more robust tenant protections, and a cultural acceptance of renting as a permanent living situation, unlike the UK where renting is still often viewed as a temporary solution​​.


In England, tenant protections are relatively weaker, particularly in areas like security of tenure. English renters typically face shorter tenancy agreements that offer less stability, making long-term planning difficult.

Additionally, the enforcement of existing laws that protect tenants is inconsistent, which undermines the potential benefits of these regulations​​.

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The Renters Reform Bill, currently under debate, aims to address some of these issues by offering more security and rights to renters. This includes measures like abolishing "no-fault" evictions, which would provide tenants with greater stability and protection from arbitrary displacement​​.


The contrast with other countries is stark. For instance, countries with stronger rental cultures have implemented rent controls and tenant protections that do not significantly deter the supply of rental housing. These measures ensure that renting remains affordable without stifling the growth of the rental sector​​.




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Halifax House Price Index Sees Decrease in March Figures: Industry Feedback


The latest Halifax House Price Index has revealed a surprising dip in house prices for March, marking a 1% decrease from the previous month. This decline follows five consecutive months of growth, stirring a mix of reactions from industry experts.


Kim Kinnaird, Director at Halifax Mortgages, points out that despite this monthly fall, the annual and quarterly figures still show growth, with a 0.3% increase over the last year and a 2.0% rise over the previous quarter. She suggests that the dip may be a temporary blip rather than a long-term trend, emphasizing the resilience of the market amidst higher borrowing costs and ongoing affordability challenges​​.


Industry voices have echoed this sentiment, highlighting the market's sensitivity to interest rate changes.


  • Jason Tebb, President of OnTheMarket, notes that the drop illustrates how price-sensitive buyers remain, finding themselves in a strong negotiating position due to the dip. He suggests that market activity is likely to pick up as more stock comes into play, spurred by more attractive mortgage rates and the expectation of their further decrease​​.

  • Nathan Emerson, CEO of Propertymark, predicts a surge in market activity as inflation falls and interest rates stabilize. He sees this as a springboard for a busy housing market season, which is traditionally buoyant during the spring and summer months​​.

  • Matt Thompson, Head of Sales at Chestertons, and Tom Bill, Head of UK Residential Research at Knight Frank, observe steady demand from buyers and a market that is drifting sideways for now. They anticipate that once a rate cut is firmly on the horizon, there might be a stronger demand capable of pushing UK prices higher throughout the year​​.


This mixed industry feedback highlights a cautious but optimistic outlook for the UK housing market. While the monthly dip has raised eyebrows, the overall resilience and underlying factors suggest a potential rebound or stabilization as the year progresses.

Narrow street with colorful buildings and a lush tree in a cozy town

Labour Suggests Implementation of New Property Tax


The Labour Party has proposed a significant overhaul of the current business rates system by introducing a new "business property taxation" model.


This initiative aims to create a more equitable tax environment, particularly leveling the playing field between physical high street businesses and online retailers, who often bear a disproportionately lower tax burden due to their minimal physical presence.


The proposed tax reform is part of Labour's broader strategy to revitalize the UK's high streets, which have suffered from years of economic challenges exacerbated by the shift towards online shopping. By restructuring the way business properties are taxed, Labour intends to alleviate the financial pressures on brick-and-mortar shops, which are critical to the economic and social fabric of local communities.


Angela Rayner and Rachel Reeves, prominent figures within Labour, emphasized the potential benefits of this reform during a policy unveiling in Tees Valley. Their plan includes not only the tax adjustments but also tougher laws on issues like shoplifting, aiming to enhance the overall shopping experience and safety on high streets.


Feedback from industry stakeholders has been predominantly positive. Emma McClarkin from the British Beer and Pub Association highlighted that the current system unfairly penalizes community pubs with a hefty £500 million annual tax bill, suggesting that a long-term solution like Labour's proposal is urgently needed. Similarly, Dee Corsi of the New West End Company and Charles Begley of the London Property Alliance have expressed strong support, noting that the reform could significantly reduce the outsized tax burdens that have strained many high street retailers.


However, the proposal has faced criticism from opposing voices within the Conservative Party, with Treasury minister Bim Afolami arguing that Labour's history of raising taxes could negatively impact working families and reverse economic gains made under the Conservatives.

Notable Expansion in the Single Family Housing Rental Sector


The UK's single family housing (SFH) rental market is undergoing a significant transformation, with a notable expansion driven by robust investor interest and changing housing needs.


According to Knight Frank's 2024 Single Family Housing Report, the sector saw a record investment of £1.9 billion last year, representing a fivefold increase from the previous year.

This surge in investment has not only elevated the profile of SFH rentals but is also reshaping the housing landscape across the UK.


The growth in the SFH sector is partly fueled by the strategic shift among investors towards suburban areas, recognizing the increasing demand for single-family homes outside the urban cores. This trend is supported by the data showing that while 44% of the existing completed SFH rental stock is concentrated in the North West, a staggering 87% of the development pipeline is located outside this region, indicating a geographical diversification of investment.


Looking ahead, Knight Frank forecasts that the number of SFH rental units in the UK could nearly triple, rising from the current level of 26,575 homes to over 60,000 in the coming years, should the investment plans materialize as expected.

This projection is based on the current capital commitments and the ongoing demand for more spacious, family-oriented rental options.


The expansion of the SFH rental market is not only a response to market demand but also a strategic adaptation by investors and developers to the evolving preferences of the British public.



Projected Increase in Gross Mortgage Lending for 2024


The UK's mortgage lending landscape is showing signs of robust growth as we move further into 2024.


According to a recent poll by TMA Club, over 80% of mortgage brokers expect an increase in gross mortgage lending this year, surpassing the official forecasts​​. This optimism is partly driven by the improving credit conditions and a steadier economic outlook, suggesting a healthier lending environment than previously anticipated.


In 2023, gross mortgage lending had seen a significant drop to £226 billion, largely due to the tightened consumer spending amidst rising living costs.


However, projections for 2024 are more optimistic, with brokers estimating gross lending to exceed £251 billion. The more conservative estimates suggest it will lie between £220 billion and £250 billion​​.

Several factors contribute to this positive outlook. The Bank of England's signals of potential base rate cuts later in the year have bolstered borrower confidence. Lisa Martin, TMA's development director, highlighted that inflation fears are receding faster than expected, which has helped rejuvenate borrower engagement with the market​​.


Furthermore, the market's dynamics are supported by lenders who are aggressively pricing to capture or increase their market share, keeping the mortgage and housing market activities lively. Anthony from RBC Capital Markets pointed out that the Q1 Credit Conditions Survey reflected an improvement in mortgage availability and approval rates, maintaining a steady demand for home purchases​​.

Large grey-shingled house with a spacious front porch and green lawn


Conclusion


The property market appears to be navigating through substantial changes, driven by shifts in economic policies, lending norms, and evolving consumer needs.


Concerns about mortgage payments underscore ongoing economic pressures, while proposals for new tax structures and the growth in the single-family housing rental sector illustrate how market participants are adjusting to these conditions.


The anticipated increase in gross mortgage lending suggests an uptick in consumer confidence and access to financing, hinting at a potentially active market as we move forward.

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