This week construction data revealed the industry had hung up its hard hat to watch Taylor Swift and the Olympics over the summer. To help remedy this the government MADE steps to boost future housing. At the same time, property portals increased their online presence with acquisition bids or by going “all out” with cricket sponsorship. Surveyors and investors subsequently became more optimistic for the future but sellers of larger homes jumped the gun. In the rental sector, the long-awaited Renters’ Reform Bill was revisited and tweaked to improve standards come… summer 2025. Welcome to another UK Property News Recap – 13.09.2024
A stake in the development game
At the start of the week, it was revealed that developer Barratt, lender Lloyds and the government, in the shape of Homes England, had entered into a joint venture to form MADE. Collectively pooling £150mn into a residential development pot, it aims to get large-scale residential-led schemes off the ground.
These will range from 1,000 to more than 10,000 homes along with a variety of community facilities and employment. Potential development opportunities will include large brownfield developments, as well as new garden village style communities. Could this be omne trium perfectum?
Property portal action
Given Costar’s acquisition of OnTheMarket and Rea’s recent £5.6m approach for Rightmove which was swiftly rebuffed, rival property portal Zoopla could have felt overlooked. Not to be outdone, it went “all-out” with its announcement that it was the Official Property Partner of England Cricket. No doubt, Zoopla is hoping for a good innings going into the autumn season.
Construction took a mini-break
Earlier construction growth in the year was muted in July as the UK embraced its first rays of sun in seven months and undisturbed recreation became more pressing than noisy household maintenance.
After an increase of 1.2% in the three months to July 2024, construction output is estimated to have decreased by 0.4% in July, after a rise of 0.5% in June 2024. This was led by declines in output in both new work, of 0.2%, and repair and maintenance, down 0.7%.
The Renters’ Rights Bill tweaks
The Renters’ Rights Bill was revisited by Labour with some additional tweaks that are planned to be implemented in time for summer 2025. These include but are not limited to:
– Section 21 – Banned
– Notice period if selling or moving back – Extended
– Inclusion of Pets
– Awaab’s Law extended into the PRS
– Refusal of rental accommodation for tenants with children or those in receipt of benefits – Abolished
– Decent Homes Standard to be applied to PRS
– Bids above asking price – Banned
– In-tenancy rent increases – Banned
– Only annual rental increases – Allowed
-Introduction of a new private rented sector database to inform landlords on obligations for compliance
Though reform is commendable some of it won’t result in noticeable change. Extending Awabb law to the private sector makes sense but including pets and enforcing landlords to accept tenants with children or on benefits won’t make a difference, if there is another offer from someone more preferable. As for banning bids above asking; all that will be achieved is higher asking prices.
Bets are off and new ones laid
As wage growth slowed and GDP flatlined for the second consecutive month; investors took to placing a new round of base rate cuts bets; fully pricing 25 basis-point cuts in November, December, February and March. This deviates from previous economists’ predictions of base rate cuts at a quarterly pace.
The takeaway…cuts are coming, but how and when will be determined in due course.
RICS Residential Market Survey
For the first time since October 2022, house prices moved onto the periphery of positive terrain. According to RICS’s residential market survey for August, surveyors predict a steady rise in prices over the next three months as more buyers and stock come to the market. The more significant rises predicted will continue to be led by Scotland and Northern Ireland, while Wales and East Anglia will lag behind. This news will spur sellers, who were already encouraged by the base rate cut, to seek valuations for their home in the hope it has regained lost 2023 price ground. The danger here is that agents wanting to win an instruction will increase initial asking prices to levels that aren’t realistic. That would result in stock sticking, and prices inevitably reducing, as buyers shop around the replenished portals, progressing on those that are priced to sell.
Government estimates suggest as many as 7,000 buildings have yet to apply for the Cladding Safety Scheme
Landlords dragging their heels over cladding works could face enforcement action after it was revealed by housing minister Rushanara Ali that up to 7,000 buildings are yet to apply for cladding safety funds.
Larger homes flood the market
According to Rightmove data, the number of top-end homes coming to the market for sale is now 15% ahead of the same period last year. This surge in activity is based on sellers’ perception of the market and the impact to their finances over the past year.
A base rate cut, encouraging data from house price indices and a fall in interest rates, has boosted seller confidence, to go to the market now the kids are back at school. However, it is the increase in taxes, mortgage and school fees and the potential rise in capital gains and inheritance tax in the budget that are underlining where they then move to.
Zoopla rental analysis
According to Zoopla, 21 people are still competing for a rental apartment despite rental stock levels increasing.
Rental stock levels have increased but remain 24% below the pre-pandemic average. As a result, around 21 people are still competing for a rental property enabling landlords to pick and choose. Reform may be coming but choice will inhibit any enforcement of tenant preference.
The supply and demand imbalance will persist into 2025, driving further rental growth, albeit at a slower rate, higher. Only when tenants affordability threshold is breached will rents recede. London is close to this, growth slowing to 2.5% but in the outskirts of city centres, where rents were historically cheaper, there remains room for expansion, for now.
And that concludes another UK Property News Recap – 13.09.2024. If you have any comments or suggestions, please get in touch here.
