This week was dominated by tenants’ rights. Be it those involved in Grenfell or still living with cladding, Right to Buy or mould-invested properties owned by Labour MP Jas Athwal. Landlords questioned the profitability of investments in the Capital, opting to move out before any other potential tax increases could be implemented in the budget. Similarly, lack of budget clarity hit prime markets which are weighing up all the additional tax outgoings before moving. Developers’ profit margins were divided, depending on their core market. Vestry profited from leaning into affordable housing while Barratt struggled to keep up short-term. Lastly, Rightmove got an unexpected boost to its share price after the Rea Group considered making a move. Welcome to another UK Property News Recap – 06.09.2024
James Cleverly got clever with Stamp Duty
James Cleverly set out his ambition to scrap stamp duty should he find himself, hypothetically, ever in a position of power. He claimed: “It disincentivises housing transactions, stopping older people from downsizing and young families from upsizing, and slows the building of new homes.” This may all be true but what you replace it with is equally important when looking to win or lose votes.
The Rea Group contemplates making the Rightmove
At the beginning of the week the Rea Group, an Australian company which is 61% owned by News Corp, considered making a move on Rightmove with a cash and share offer. This caused Righmove’s shares, which had previously stagnated, to increase 27% while Rea’s shares fell 7%. Australian shareholders were seemingly less keen on making a “move.”
Labour MP Jas Athwal caught with mould
Labour’s biggest newly-elected landlord was exposed for renting properties that were mould and ant-infested. Keen to wash his hands of this, blame was proportioned to the managing agent who also hadn’t managed to renew Mr Athwal’s HMO licences and a swift apology was delivered. Given his new position, it’s hard to comprehend why he didn’t check his houses were in order.
As a result of his complacency the London Renters’ Union called for his resignation but he remains in his polished seat.
Grenfell damning report lands
As the long-awaited Grenfell report was delivered this week, the Guardian uncovered that about £250m in refurbishment deals had been made in the past 5 years with corporations implicated in Grenfell’s demise. “They include companies currently or formerly owned by Saint-Gobain, which made the combustible Celotex insulation used on the tower, and Rydon, the main contractor for the works.”
When the cause benefits, the system is broken.
First-time buyer hotspots out of London
According to Halifax, 49% of all homes bought with a mortgage went to first-time buyers keen to escape the rental circus.
To achieve this, when buying out of the Capital, first-timers looked for areas that display growth potential, are affordable, connected, close to amenities and under the LISA threshold.
Outside of London, Manchester topped the most sought-after location list, followed by Slough and Sandwell with the percentage of buyers increasing to 75% and 73% respectively.
Knight Frank sees the top of the ladder wobble
The lower rungs may be on the move but further up, buyer caution prevails, until budget speculation over increased taxes is clarified.
“While Knight Frank data shows the number of UK exchanges rose by 6% versus the five-year average in July, there was a 12% fall above £2 million.
Although £2 million + sales represented 6% of all transactions in the year to March 2023, they accounted for 22% of the £11.7 billion raised in stamp duty.”
Hit by the change in non-dom status and VAT on school fees, additional concerns over potential raises to inheritance tax and capital gains are testing buyers’ resolve for additional space.
Angela Rayner tweaks Right to Buy
Angela Rayner came under media fire for revisiting Right to Buy after benefiting from the scheme herself.
As she consults with councils, keen to see the scheme axed, she looks for some middle ground, which will enable her to keep the scheme but reform it, thereby safeguarding the dwindling existing social housing stock until it makes financial sense for builders and housing associations to build and invest.
John Lewis presses ahead with planning application on Reading Site
For all life’s “rental” moments… John Lewis submitted planning for 215 rental flats on its old Reading depot of which 10% will be offered at “affordable” rents. The company, which is looking to branch out from retail into the rental market, hopes to boost its bottom line by turning Landlord.
Barratt looks to the future with Redrow
Barratt hopes its recent union with Redrow has proved timely under Labour’s reign, due to planning reforms. In the meantime “it is bolstering sales with more incentives and offloading more properties through bulk deals to rental investors. The rate of price declines on its private reservations slowed to 2.7% in the second half from 5.6% in the previous six months.”
When too many gains are eaten into, the motivation to stay in the Landlord game is squashed
If increased rents don’t cover increased mortgages and CGT is increased, then over-exposed landlords, predominantly London-based, will and are selling up. Nearly a third (29%) of homes currently for sale in the Capital were previously for rent according to Rightmove.
With no incentives in sight, cash-light landlords will increasingly abandon the market when it’s time to renew their mortgage.
Developer Vistry Half-Yearly Results
Developer Vistry, in its half-yearly results, showed “affordable” gains increasing its adjusted operating profit by 10% to £227.3m (H1 23: £206.7m)
Encouraged by a strong summer performance, Labour’s planning reforms, and reinstatement of housing targets the company, which is on track to deliver more than 18,000 completions in FY24, and has a forward sales position totalling £5.1bn (2023: £4.3bn), up 19% on the prior year, is hopeful of a booming future.
S&P Global Construction Index
The construction industry took a step off the gas in August but continued to motor forward. Commercial activity made up the most ground while civil engineering switched to cruise control. Only residential activity picked up speed; bolstered by improved market conditions and lower borrowing costs.
Moving forward, 50% of the survey panel anticipated a rise in output during the
year ahead, while only 9% forecasted a reduction. The consensus, from those surveyed, is that Labour will be good for residential business but maybe less so for longer-term infrastructure spending.
Halifax HPI August 2024
House prices continued to rise during the summer albeit at a slower pace. Increasing 0.3% on July’s efforts to £292,505. On an annual basis Northern Ireland led the house price comeback, rising +9.8%, followed by Wales +5.5%, the North West at +4.0%, then Scotland at +1.7% & London at +1.5%. According to Halifax this makes the AVERAGE property just £1,000 shy of the record high in June 2022.
This will encourage more sellers to come to market but it is important to remember that an AVERAGE is not ALL. Pricing remains sensitive to buyers’ ability to reach. To avoid a protracted marketing period, littered with reductions, price right to move forward.
And that concludes another UK Property News Recap – 06.09.2024. If you have any comments or suggestions, please get in touch here
