This week, the base rate held steady, but the strain of higher interest rates rippled through the UK property market. Tax pressures turned landlords into limited companies, developers pushed back on cladding levies, and construction sites ground to a halt under relentless rain. Meanwhile, local councils warned of impending tax hikes, squeezing key workers already struggling with rising rents. Welcome to another UK Property News Recap – 21.03.2025.
Rightmove asking prices show signs of growth
Asking prices sprung upward by 1.1% in March, along with the number of impatient sellers, who’ve been waiting for a change in the weather before listing. As a result, the average ASKING price in the UK is currently £371,870, which frankly, means nothing.
With the portals now in bloom, buyers can pick and choose leaving those properties left on the shelf to wilt. Pricing to sell rather than to appease egos remains key if sellers don’t want to be overlooked for another.
Meanwhile around 25,000 first time buyers who are already in the conveyancing queue and will be most affected by not making the stamp duty deadline, face fierce competition as a reported 575,000 agreed sales also currently await completion.
The rise of the Limited Company Landlord
Rental growth may have boosted some landlords’ yields but with increasing costs, switching to a limited company to save on your tax bill makes financial sense. As a result, since February 2016, (when full mortgage interest tax relief started to be withdrawn) the number of companies holding buy-to-let property in the UK rose from 92,975 to 401,744 (+332%). In 2024 alone, there was a 23% increase in limited companies. 30-40% of these were set up within a year while the remainder, more established landlords, switched up.
As stamp duty for second homes increases to 5% this could slow down further investment for many, but not those cash rich looking to make a killing on desperation and a good return.
Londoners brace for council tax rises
Past poor investments and overspending by local authorities are hitting Londoners hard. With borrowing costs high and funding scarce, councils are turning to residents to bridge the gap. Nearly all of London’s local authorities plan to raise council tax by just under 5%, while in Newham, the government has approved an 8.99% hike for 2025-26 to cover soaring temporary accommodation costs.
Housebuilders call on Reeves for a rethink on £3.4bn building safety fund
Over 100 housebuilders called for less tax via the building safety fund, if the government wants more homes. Developers who are set to profit off the back of new homes sales and not the ones they have to retrofit are looking for an out. They are attempting to do this by passive aggressively warning Reeves that the government’s new homes target won’t be hit if not. Kicking the can down the road.
Construction output falls for another month
The bad weather is blamed for construction output falling by 0.2% for the second month in a row, in January 2025. This was predominantly led by a 0.7% fall in New Work while, after Christmas, repair and maintenance boosted numbers with a 0.4% increase. Overall, in the three months to January, output edged up 0.4% from a spurt of new work activity, pre Christmas, in November. This suggests things may pick up with the weather and… further rate reductions
The price gap between houses and flats widens
The gap between house and flat prices has widened as buyers opt for more space, and control over their outgoings. Flats have lost their appeal after the cladding scandal, while exorbitant service charges and costly fire and safety remedial works have consumed buyer confidence. As a result, lender Halifax found that over the past year alone; terraced house prices rose 4.5%, closely followed by detached houses which increased 4.1% and semi detached homes, at 3.8%, while flats only increased 3.2%.
First time home buyers fled the capital in 2023
As rates rose so first time buyer numbers fell in the capital. In 2023 12.7% of first-time buyer mortgages were sold for homes located in the capital – down from 16.8% a decade earlier. In contrast, in the South of England first-time buyer mortgages in the UK rose by the highest proportion, 13.8%. For those first time buyers sticking close to London, Dartford was the destination of choice with the highest increase in buyers looking to balance access and affordability. This was replicated in Scotland, with the highest rate of first time buyer growth to be found on the fringes of cities.
The construction sector saw the highest number of insolvencies in 2024
The construction industry continued to struggle in 2024 as restricted finances hampered development. This resulted in the construction industry experiencing the highest number of insolvencies in the 12 months to January 2025 at 4,031, making up 17% of all industry cases. There remains a willingness to build and buy, by both developers and buyers, but if you can’t afford to do either something always gives.
Crest Nicholson has a promising start to 2025
Developer Crest Nicholson on Thursday was encouraged by its 2025 start as its open market sales rate in the 10 week period to 14 March, (excluding bulk) increased to 0.61 from 0.50 in FY24. Off the back of this, they remain optimistic of delivering results in line with guidance in the current financial year and of increasing the group’s gross margin in the mid-term.
Norges Banks on London Tourism
Norges Bank Investment Management has bet on long term tourism to boost rents in prime central London hot spots. Norway’s sovereign wealth fund has increased its exposure in the capital by buying a 25 per cent non-controlling stake in the £2.7bn Covent Garden estate, which Shaftesbury will continue to manage.
The Bank of England holds rates at 4.5%
The Bank of England voted 8 to 1 to hold the base rate at 4.5% on Thursday. The Monetary Policy Committee anticipates CPI inflation to rise to around 3¾% in 2025 Q3 before falling back. As a result, they are adopting a more “gradual and careful approach to the further withdrawal of monetary policy.” That said, if demand further weakens relative to supply they may take a less restrictive path of Bank Rate. Until then, expect more of the same and no significant changes to interest rates to relieve borrowers.
Key workers struggle to find Shelter
Any rent that consumes more than 30% of your pay is considered unaffordable. The charity, Shelter, found that for half the country renting a one bedroom flat is now unaffordable for new nurses – rent for an average one-bed property taking up to more than 30% of their gross pay.
For new teachers, Shelter found private rented homes are unaffordable in 43% of England, while the figure rises to 69% for a healthcare assistant in the NHS.
The affordable home numbers promised per development have already been watered down and are usually anything but. Without key workers we can’t function as a society. We can’t afford not to find an affordable solution.
Lloyd’s moves back home
After a prolonged stint in the Rogers Building, Lloyd’s is returning home to its original stone, palazzo style home, the Collcutt Building, and putting the Rogers Building up for sale for a cool £90m with CBRE.
And that concludes another UK Property News Recap – 21.03.2025. If you have any comments or suggestions, please get in touch.
