This week reform needed work, Rightmove overexerted itself, affordability got stretched and first-time buyers were told something they already knew. Welcome to another UK Property News Recap – 26.04.24.
The leasehold reform bill divides opinion
The route to making the leasehold reform bill law is long and winding; plagued with bumps, obstacles, and plenty of diversions, and for those involved the journey has taken its toll. Five years and a third reading later, union ACORN hopped off the bus, demanding further amendments were made, to deliver “a better deal for tenants.” The Lords will now tinker over the mechanics before the Commons vote again. The delay over the abolishment of section 21 notices, due to the courts need for reform to facilitate the increased capacity, remains, with no date set and no sign of anything improving, certainly not in the short term. Frustration was high amongst renters.
Labour, keen to reassure tenants, has vowed to ban Section 21 no-fault evictions without exception on their first day in power. Though encouraging for renters, this still doesn’t solve a problem the Government had five years to fix. Plus, the prospect of a two-year wait before evicting a tenant, also touted by Labour, certainly won’t help rental stock levels.
Sellers of larger homes push for higher prices
Rightmove, clearly wanted the limelight this week, releasing not one but two press releases based on data collated from their platform.
Firstly, they highlighted how sellers of larger homes who waited out 2023 price drops, and pinned hopes on rates being trimmed in time for their 2024 gardens to bloom, were coming out with renewed confidence of securing a buyer this time round. This has driven up the overall average growth in asking prices, AKA optimism, by 1.1% in April 2024 to £372,324.
The number of new sellers, at this higher level, increased 18% compared with last year, and the number of sales being agreed were up by 20%.
Despite the belief that the dry spell is over, pricing remains sensitive. The properties that will be picked from the market stall will be those that haven’t been overexposed, overpriced and remain affordable to those buyers they hope to attract.
Secondly, Rightmove showed the areas that were affordable for first time buyers and those that were not. The dilemma for those looking to get onto the ladder is how they juggle location over work. Unfortunately, the choice of affordable homeownership is at odds with earning more pay in a job you trained for, in a location where you can’t afford to save for a deposit.
Aberdeen, which was the cheapest city to be a first-time buyer with an average asking price of £102,602 sounds good but the reason London, St Albans, Cambridge and Winchester are the most expensive areas to buy and rent is because they are commutable, and offer the potential for job progression, culture and diversity.
First time buyers face the toughest time in 70 years
A report, penned by housing market analyst Neal Hudson for the BSA, showed the combination of property price rises, fuelled by post-pandemic aspirations and stamp duty madness, swiftly followed by high interest rates has left first time buyers struggling to reach the first rung of the ladder. Unless they are fortunate enough to bank with mum and dad or have found a partner they can pool their income with for a deposit, many now face serving a longer term in the rental market.
Labour’s golden rules
PRs love to tell political parties to outline a to-do list, of around five points, so as to keep it memorable, and if you can colour code it too, even better:) Diligently, Labour, keen to impress they are now the party of homeownership, set out brownfield development would come first, then grey (carparks, wasteland) before infiltrating the green belt. To compensate for this, they promised to make 50% of the housing on this land affordable…what they deem as affordable though remains unclear. Alongside this, they promised all the usual sound bites of improving infrastructure, green spaces, while also ensuring high environmental standards.
A tale of two developers
For developers Taylor Wimpey and Permission, results for Q1 couldn’t have been more different.
Taylor Wimpey’s net private sales rate for the year to 21 April 2024 was 0.73 per outlet per week down from 0.75 in 2023. However, when bulk sales were excluded, the net private sales rate for the year to 21 April 2024 was 0.69 per outlet per week up from 0.66 in 2023.
However, the total value of their order book was down to £2,090 million versus £2,379 million in 2023. Despite this the developer remains positive for the second half of the year going into 2025, when the “base” kicks in.
For Permission, it appeared that off the back of rate trims, sales got a 2024 kick-start – their net sales rate rose 6% and their order book was up 18% on last year. Prices also increased 6% from the start of 2024 to an average of c.£283,000 from £266,100 at the end of December 2023. However the group delivered fewer homes, a total of 1,027 homes, down from 1,136 in Q1 2023 and incentives remained around 4-5% on average..
The pound, the dollar and the rates
Over the pond in the US, rate cut hopes were dashed earlier after inflation came in higher than hoped. This was a blow to both borrowers there and here as expectations for a summer rate cut were dampened, due to many believing the UK will not want to make the first move for fear of the pound falling further. Given the UK’s path to reducing inflation is ahead of the US, others bet on the UK moving first, which saw the pound fall again against the dollar. This was curtailed once Huw Pill was wheeled out to give a speech warning about making cuts too soon.
I mean, who needs soaps.
In the interim, rates here edged back up, lenders keen to make hay while they can, costing once-hopeful borrowers.
Lloyds Bank pre-tax profit falls 28%
Lloyds Banking Group’s profits fell foul of higher operating costs and lower net interest income resulting in a 28% fall in pre-tax profits in the first three months of 2024.
Much of the blame fell on severance charges totalling £100 million, which increased operating losses by 11% for the Lloyds Banking Group while loans and advances to customers fell to £448.5 billion in the first quarter of 2024, with a £1.6 billion reduction in its UK mortgages portfolio. Despite this, the group remains positive re-writing their previous forecast of a 2.2% fall in property prices this year to a 1.5% increase.
And that concludes another UK Property News Recap – 26.04.2024. Should you have any comments or suggestions, as ever, please get in touch here.
