Welcome to NestInsights, your guide to the evolving UK property market. In this blog series, we explore the latest property news and developments that shape the sector, offering you the insights needed to navigate and thrive. Our goal is to provide a comprehensive overview that empowers you to make well-informed decisions in this dynamic market.
Table of Contents
Property Giants to Merge Following £2.5bn Deal Approval by UK Regulator
OnTheMarket to Undergo Rebranding, Announces CoStar CEO
Monthly Property Transactions Surpass 100,000 Mark for the First Time in Two Years
One-Third of Student Rental Properties at Risk Due to Proposed Renters’ Rights Bill
Nigel Farage Criticizes Government's "Self-Defeating" Rental Reform Bill
Mortgage Rates Remain High Despite Recent Improvements from Peak Levels
UK Property News Week 41
Property Giants to Merge Following £2.5bn Deal Approval by UK Regulator
In a landmark development for the UK housing sector, the merger between two of the country's largest property developers, Barratt Developments and Redrow, has received the green light from the Competition and Markets Authority (CMA).
Valued at £2.5 billion, the merger is set to create a housing giant capable of building approximately 23,000 homes annually, with an estimated combined turnover exceeding £7 billion.
The approval by the CMA marks the end of regulatory scrutiny, which had focused on potential local competition concerns. These were addressed through specific undertakings by the two companies, including the appointment of Savills, a third-party agent, to manage the sale of unsold properties at Redrow’s Nantwich site.
The newly formed entity, Barratt Redrow, is expected to have significant market influence, with operations beginning under the new name on the London Stock Exchange. David Thomas, Barratt’s CEO and the newly appointed head of the combined group, has hailed this merger as a major milestone.
He stated that the combined resources of Barratt Redrow will "accelerate the delivery of homes that the UK urgently needs".
Redrow’s CEO, Matthew Pratt, will remain in his role within the newly merged company and has joined the board of the new group. The focus for both companies now lies in integrating their operations effectively, a process anticipated to take around 18 months.
This merger signals not only the consolidation of two key players in the market but also a potential shift in the competitive landscape of the UK's housing sector. As Barratt Redrow embarks on its journey, the industry will closely watch how this newly formed giant shapes housing availability and affordability across the country.
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OnTheMarket to Undergo Rebranding, Announces CoStar CEO
In a significant development for the UK property portal landscape, CoStar Group, the company that acquired OnTheMarket for £99 million in 2023, has announced plans to rebrand the platform as "Homes.com."
The announcement was made by CoStar CEO Andy Florance during the Proptech and Portal Watch conference in Barcelona.
Florance emphasized that the rebranding is part of a broader strategy to position OnTheMarket as a major competitor to Rightmove, the dominant player in the UK property portal market. According to Florance,
OnTheMarket has already overtaken Zoopla in terms of the number of leads generated for agents.
The CEO also revealed that CoStar plans to invest substantial marketing resources to strengthen OnTheMarket’s market presence, with a potential marketing investment between $300 million and $400 million.
Florance was critical of Rightmove’s current pricing strategy, citing that its operating margins of 74% make it vulnerable and indicate a lack of focus on long-term growth. CoStar intends to differentiate itself by offering competitive pricing, superior software, and more agent-focused services.
This approach, according to Florance, will help OnTheMarket provide better value and respect for agents, a departure from what he described as other portals’ tendency to disregard their customers.
The proposed rebranding to "Homes.com" also comes with an ambitious vision to expand brand recognition, with speculations that the new name might even be associated with major sponsorship deals, including potentially naming a new Manchester United stadium. This rebranding marks a bold step in reshaping the competitive dynamics of the UK property portal industry, and it will be interesting to observe how the market responds in the coming years.
Monthly Property Transactions Surpass 100,000 Mark for the First Time in Two Years
In a positive signal for the UK housing market, monthly property transactions exceeded 100,000 in August 2024 for the first time since December 2022. This significant rise in transaction volumes reflects increasing confidence among buyers, bolstered by improving mortgage affordability, steady wage growth, and falling interest rates.
According to official data, 104,330 property transactions were completed across the UK in August, representing a 7.6% increase from Julyy experts attribute this resurgence to a greater degree of certainty in the mortgage market, following a stabilization of interest rates.
Guy Gittins, CEO of Foxtons, noted that the combination of more favorable mortgage rates and a hold on base rates since September 2023 has given buyers the confidence to act.
The figures suggest that the market is returning to form, with a steady recovery expected to continue into next year.
Althouook is positive, analysts caution that the market is unlikely to return to full strength until 2025. The time lag between mortgage approvals and completed transactions means that while buyer interest is high, it will take several months for this activity to fully reflect in transaction volumes.
One-Third of Student Rental Properties at Risk Due to Proposed Renters’ Rights Bill
Concerns are mounting in the UK rental market as a third of student rental properties, particularly one- and two-bedroom homes, could be at risk under the proposed Renters’ Rights Bill (RRB).
According to Accommodation For Students, 32% of student properties currently fall outside the protection provided to larger homes, like Houses in Multiple Occupation (HMOs), leaving these smaller rentals vulnerable if the bill proceeds in its current form.
The primary issue revolves around the removal of fixed-term tenancies, which has been a staple of the student rental market. Fixed-term contracts, typically aligned with academic cycles, give landlords the certainty they need to prepare for the next intake of tenants. The proposed switch to rolling tenancies under the RRB would allow tenants to leave with just two months' notice, disrupting this cycle and creating uncertainty for landlords.
This gap in the bill’s protections is expected to significantly impact housing availability by 2026. The shortage could exacerbate the already difficult student housing crisis, with a projected shortfall of 490,000 student beds in the coming years.
Nigel Farage Criticizes Government's "Self-Defeating" Rental Reform Bill
Nigel Farage has publicly expressed strong opposition to the UK government’s proposed Renters' Rights Bill, describing it as a “self-defeating” piece of legislation that could significantly harm the private rental market. Speaking on GB News, the Reform UK party leader warned that the bill, driven by the Labour government, may lead to a notable reduction in the availability of rental properties. Farage emphasized that landlords, including himself, may opt to sell their properties rather than contend with the increasing regulatory burden.
This would further tighten the rental market and push rents even higher at a time when they have already increased by an average of 21% across England over the past four years.
The proposed bill includes measures such as the elimination of fixed-term tenancies and stricter eviction rules, which Farage believes would drive more landlords out of the sector.
These reforms, aimed at protecting tenants, could backfire by reducing the number of available rental properties, exacerbating the existing housing shortage. Farage argued that with the population growing rapidly, largely due to high levels of net migration, the focus should be on increasing the supply of rental homes rather than imposing measures that discourage property ownership and letting.
Farage’s concerns reflect those of many landlords who fear that the Renters' Rights Bill could lead to unintended consequences, with fewer rental properties available, rising rents, and a further squeeze on an already strained market. The bill, led by Deputy Prime Minister Angela Rayner, has sparked debate over how best to balance tenant protections with maintaining a healthy supply of rental properties.
Mortgage Rates Remain High Despite Recent Improvements from Peak Levels
While mortgage rates in the UK have improved slightly from their 2023 peak, they remain significantly higher than recent historical norms, posing continued challenges for homebuyers.
According to data from Rightmove’s mortgage tracker, the average mortgage payment for first-time buyers is now £931 per month, compared to just £578 in 2019. This represents a £353 increase, or 61%, in average payments over the past five years.
Though mortgage rates have eased since their peak in July 2023—when typical payments exceeded £1,080 per month for a first-time buyer—current rates are still a major burden. The average five-year fixed mortgage rate is now 4.58% for buyers with a 20% deposit, compared to just 2.13% in 2019. This hike has forced many potential buyers to delay their home purchases or extend their mortgage terms to make payments more manageable.
Additionally, the affordability gap continues to widen across the UK, with regions such as the North West seeing monthly mortgage payments rise by as much as 75% compared to five years ago.
Although the market is showing some signs of recovery with more properties becoming available, the high cost of borrowing is still pricing many potential first-time buyers out of the market.
This pressure on homebuyers highlights the ongoing need for governmental and financial intervention to balance mortgage affordability with rising property prices, particularly as wage growth lags behind housing costs
Takeaways
The merger of Barratt Developments and Redrow will create a housing giant capable of building 23,000 homes annually, significantly impacting the UK's housing market.
CoStar Group plans to rebrand OnTheMarket as "Homes.com," aiming to challenge Rightmove with competitive pricing and enhanced agent services.
The UK housing market saw over 104,000 property transactions in August 2024, indicating increased buyer confidence due to improved mortgage conditions and wage growth.
32% of student rental properties are at risk under the Renters’ Rights Bill, which could exacerbate the student housing shortage by 2026.
Farage warns that the Renters' Rights Bill could reduce rental property availability, pushing rents higher and worsening the housing crisis.
Despite a slight decrease from peak levels, mortgage rates remain high, with average first-time buyer payments up 61% compared to 2019, pricing many buyers out of the market.
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