2023 Will Be a Good Year for UK Landlords

With rising interest rates keeping many buyers on the side-lines, landlords will have no shortage of potential tenants for this year. According to the British Landlord Association (BLA) the number of people looking for rentals is up 142% from 5 years ago whilst demand from buyers is down some 33% according to Zoopla. This increased rental demand coupled with the ongoing supply shortage has pushed the average rental yield in the UK to a healthy 4.7%. The BLA’s research revealed that more than 50% of landlords plan further investment this year. Cash buyers are obviously in a stronger position to negotiate discounts in a market expecting an average 5% price decrease. However, some landlords are happy to bite the bullet this year with floating rate mortgage finance and benefit in the long term as rates reduce.

Posted by: Kelvin Tayfield, Sun, Jan 8th 2023

UK Property Market Review

2022 saw UK property prices rising to record levels until June when annual growth was at 12.5%, however recession fears and rising interest rates saw this growth trimmed back to 2.8% by the end of December according to Nationwide’s house price index. Whilst uncertainty remains, mortgage rates have settled and most analysts agree that these will start to reduce by the end of 2023. With Nationwide reporting a 0.1% decline in December, Knight Frank believe that the monthly price reductions have ended and the market will now be in a holding pattern noting that the real test will be in the spring when activity is usually at its highest. Since 2008, lenders have been forced to do more robust affordability stress testing and Nationwide report that most households are in good shape to weather the storm caused by rising rates.

From a regulatory perspective, the government has provided some support in that it extended the guarantee to lenders to support their 95% mortgage offering. Furthermore, it retained the stamp duty holiday announced by Kwasi Kwarteng with an exemption on the first £250,000 and for first time buyers no tax up to £425,000 for properties up to £625,000. These exemptions apply until April 2025.

Posted by: Kelvin Tayfield, Sun, Jan 1st 2023

London Extends Rightmove Searches Lead in 2022

The lockdown dream of leaving the city behind faded in 2022 with the city holding the top position on Rightmove searches by some way. During several months in 2021 Cornwall was more popular than London on the site although the city still finished on top for the year. In 2022 searches for Devon and Cornwall fell by 17% and 18% respectively whilst London saw a 9% increase. Rightmove also noted that 2022 was the most competitive rental market on record with 4 times more rental enquiries than available properties, a situation unlikely to change as borrowing costs force potential homeowners to continue renting.

Posted by: Kelvin Tayfield, Sun, Dec 25th 2022

The Race for Space is Over

Sales figures for UK residential property revealed the expected drop in prices in November as the usual winter slowdown commenced amidst a rise in mortgage rates. The largest falls were in Wales and the Southwest, areas that were the biggest beneficiaries during the Covid period race for space. This fall is driven largely by second homeowners who have been impacted by rising mortgage rates and general inflation. Savills Exeter for example, reported a 50% fall in enquiries from second home buyers compared to 2021. Instead, a trend recently highlighted in a Cluttons Prime Central London report is sustained demand for new developments with central gardens and amenities such as gyms and co-working spaces.

Posted by: Kelvin Tayfield, Sun, Dec 11th 2022

Recession Benefits Liquid UK Buy-To-Let Investors

According to property portal Rightmove rental enquiries in the UK have increased by 23% over the past year. This trend is not expected to change as the driving factors continue to apply pressure on potential homeowners. Until recently rising price was the main constraint although low interest rates did allow some buyers entry. This has all changed due to recessionary pressures with prices predicted to fall in most areas noting that energy efficient new builds will see some stability due to supply shortages. However soaring mortgage rates and energy costs negate any price declines thereby keeping potential homeowners in the rental market allowing unleveraged buy-to-let investors to continue earning highly satisfactory returns.

Posted by: Kelvin Tayfield, Sun, Dec 4th 2022