This week, Q3 report cards for lender Lloyds, developer Barratt and Redrow, supplier Travis Perkins and estate agency Foxtons showed them all to be “working towards”, with the exception of Foxtons which “exceeded expectations.” Meanwhile first time buyers trying to work their way on to the ladder learned prices were rising as their temporary stamp duty threshold stool was due to be kicked aside by Labour come April 2025. Welcome to another UK Property News Recap – 25.10.2024.
Property Rental Income Statistics
Rent, rates, insurance, and repairs and maintenance are common expenses for unincorporated landlords but mortgages are the biggest expense declared, with £6.87bn being claimed from 2022 to 2023. This accounted for 30% of all costs claimed against UK property income by unincorporated landlords. leaving little profit after other expenses are accounted for.
Social Housing Whispers
The rumour mill this week was abuzz with speculation around a social housing boost to funding, with around £500 m-£1bn to be drip-fed over the next 18 months, in an attempt to increase the number of affordable housing and stem the inevitable rise in housing benefits. Plans were also circulating that Right to Buy discounts would be closer to 25% and the time before social tenants could buy could stretch from 3 years to 10 years.
Rightmove’s House Price Index for October 2024
With the portal property shelves well stocked, buyers are shopping around, keeping asking price growth muted. Average new seller asking prices rose by just 0.3% (+£1,199) in October to £371,958.
The budget and impending base cuts are keeping some sections of the market from making a beeline for the checkout while others, lower down the ladder, crack on. Once delivered, the expectation is for sales to pick up.
Budget clarity stalls the top of the market
According to Knight Frank, budget jitters prove costly for the top end of the market. Overcoming a seller’s ego is tough unless the potential tax burden outweighs any property loss. As a result, the number of offers made on UK properties below £2 million fell 5% in the year to September. Meanwhile, the equivalent fall above £5 million was 18%.
First-time buyers watch the stamp duty threshold clock
From April 2025, Labour plans to revert the Stamp Duty Tax threshold to its original level of £125,000, and for first-time buyers to £300,000. Faced with this impending increase, on already squeezed finances, many first timers will make a move before then, with activity spiking after each potential base cut before then.
Lloyds’ profits take a hit
Lloyds’ third-quarter figures showed profits tumbled from £4.3bn to £3.8bn. Net income fell 7% on the prior year as operating costs increased 5%. Despite UK mortgage growth of £3.9 bn, the once-lucrative profit margins of 2023, 3.15%, have recently been beaten down to 2.94% to remain competitive, diminishing the bank’s bottom line.
Barratt and Redrow streamline
When two become one, something has to give. Barratt Redrow’s merger sees nine divisions culled with activities re-aligned across 32 divisions. £90m of cumulative synergies is planned by FY28. Changes to the divisional office structure is expected to account for 37% – or £33m – of this, while procurement-related savings are set to deliver 38% (£34m).
The remaining 25% (£23m) is expected to come from the consolidation of duplicated central and support functions, which it said would include the rationalisation of board and senior management positions.
Travis Perkins’ Q3 Trading
Travis Perkins’ Q3 trading update showed group revenue was down 5.7%, largely due to loss-making operations in Toolstation France which is due to cease trading by the end of 2024. In the UK though, revenue for Toolstation was up +2.9% and +9.7% in Holland for Benelux. Despite revenue overall dipping, growth over the next 12 months is expected to slowly build as borrowing becomes cheaper and wages increase.
Foxtons continues its run of growth
Revenue for the estate agency was up 8% to £47.4m from Q3 2023: £43.9m. Growth in Q3 was predominantly driven by Sales as the property market builds on what was a downbeat 2023. Revenue increased 36% to £13.5m from Q3 2023: £9.9m, while Lettings revenue remained consistent at £31.6m on par with Q3 2023.
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Saving developers’ bottom line instead of the environment takes preference
The Government shows signs of caving to developer demands, who they need to build more homes, by considering making solar panels on new homes “optional.”
Aware Super and Delancey to invest £1bn in London office sector
Australian pension fund Aware Super and Delancey partner up to feast on the UK commercial property pickings, struggling to pay off their debt, as demand wanes post-pandemic. Betting against the current market, for a payday from those office spaces that are the best in class
Lenders play cat and mouse
This week, lenders tweak numbers again by a 100th of one percentage point. Backtracking on marginal gains implemented on residential mortgages last week according to Moneyfacts.
The average 2-year fixed residential mortgage rate today is down from 5.41% to 5.39%
The average 5-year fixed residential mortgage rate today is down from 5.10% to 5.09%.
The average 2-year buy-to-let residential mortgage rate today is unchanged 5.24%.
The average 5-year buy-to-let residential mortgage rate today is unchanged 5.29%.
And that concludes another UK Property News Recap – 25.10.2024. If you have any comments or suggestions, please get in touch here.