This week, aftereffects caused by the era of cheap money coming to a close continue to resonate with those renting, hoping to buy, build or invest. The 2024 base rate cut continues to elude but eyes look with optimism to the autumn horizon.  In the meantime, lenders use improving rates to attract buyers who otherwise had dialled out over the summer, tempting some but not others. Welcome to another UK Property News Recap – 26.07.24.

 

Skipton Group Home Affordability Index

 

The week kicked off with news that Skipton had teamed up with Oxford Economics to create a new House Price Index (HPI) that will be released every six months. Its data is based on Skipton Group businesses, the Office for National Statistics, the Bank of England and third-party external sources, to provide insight on the affordability challenges faced by renters, first-time buyers and homeowners by age, income.

 

 

 

In its first index, it highlighted the plight of first-time buyers:

• Only 1 in 8 potential first-time buyers can purchase the average first-time buyer house in their area, based on their own financial situation.
• Almost 80% of potential first-time buyers have insufficient savings for the deposit needed to get onto the property ladder in their area.
• Nearly 4 in 10 renters spend 45% or more of their income on essential housing costs, compounding their inability to save for a deposit.

 

Demonstrating that when cheap money and the volume of housing remains restricted, the divide between those who can buy and those who can’t widens. 

Buying a home now comes down to how affluent your parents are, what you make with your partner, or your ability to earn above the average pay, early doors. Where you can then afford to buy and what kind of space and size depends on these. 

 

 

 

UK Finance highlights the turbulent state of the buy-to-let market

 

UK Finance, found that despite the average gross buy-to-let rental yield increasing to 6.88% in Q1 2024, compared with 6.23% in Q1 2023, landlords, in need of finance, took a backseat. The number of buy-to-let loans reduced by 16.7% in Q1 2024 compared with the same quarter in the previous year – a drop in value of 17.3%. 

Landlord’s financial motivation was dampened by high borrowing costs and legislative changes, resulting in the number of non-portfolio landlords falling 16.9% and portfolio landlords by 18.2%. Many preferred to streamline their portfolio, culling the less profitable or tired properties for more energy efficient and reliable earners.

 

 

 

 

Hamptons Letting Index – July 2024

 

Landlords with debt have lost their appetite unless the yield stacks up against increased borrowing costs, an additional 3% stamp duty and the absence of tax-free condiments. Due to this, estate agent, Hamptons estimates 328,750 more rental homes were sold than bought since 2016. In the North East, where property prices are lowest, investment still stacks up but in London, where the price tag versus the yield repeats on you, the share of homes bought by landlords has halved from 17% in 2015 to 8% so far this year.

 

 

Rightmove Quartely Rental Trends Tracker – July 2024

 

Rental growth and demand may have diminished but what landlords ask and tenants pay hasn’t. According to Rightmove’s Rental Trend Tracker for July 2024, despite stock levels improving the number of rental properties available is still 20% below pre-pandemic levels. This has fuelled price rises making the average advertised rent outside of London now £1,314 per month, 7% higher than last year, and 4% higher in the capital, where it is now £2,661.

 

 

Mortgage prisoners have their day in court

 

Northern Rock ‘mortgage prisoners’ took TSB subsidiary, Whistletree, to court after they profiteered by buying their loans and then charged them more than the normal SVR – kicking them financially when already down. This case involves 2,500 mortgage prisoners, the 47,000 other prisoners whose debt was sold off to other companies will be watching keenly for a win.

 

New Homes Statistics Review

 

The new homes statistics review for Q1 2024 saw new homes registered in the private and the rental and affordable sector fall, along with completions, but new home registrations did rise month-on-month in the quarter, indicating tentative signs of growth. However, to achieve the new government’s target of 1.5m homes over the next five years, the present quarterly rate of new home registrations will need to more than double.

 

 

 

Headline results 

• 21,967 new homes registered in Q1 2024, 20% down on Q1 2023. 
• 13,633 new homes registered in the Private sector in Q1 2024, 21% down on Q1 2023. 
• 8,334 new homes registered in the Rental and Affordable sector in Q1 2024, 19% down on Q1 2023
• 26,240 new homes completed in Q1 2024, 13% down on Q1 2023. 
• Month-on-month increases in new home registrations in Q1 2024 indicate tentative signs of growth.

 

Nationwide cuts rates

 

Nationwide tried to garner new business that’s currently on an extended base rate cut summer meditation, by trimming rates while also increasing their MVR, to extract more funds from those who’ve been waiting for a base cut to be realised since spring.

This will encourage some to make a move before other buyers join in mid-September.

 

Institute of Fiscal Studies – Living Standards Report

 

An additional 370,000 households already behind in their bills, who’ve yet to remortgage at a higher interest rate, could be drawn into poverty, said the Institute of Fiscal Studies in their Living Standards Report.  This data estimate is based on an average interest rate of 7.9% which some will pay, or more, and others less. Whatever the percentage increase, it will be significant enough to be felt acutely, further squeezing household finances, leading to many falling on hard times.

 

 

Lloyds Bank banks on better times 

 

Lloyds bank reduced its financial buffer against the potential risk of borrowers falling into arrears or defaulting by 89% on the previous year. This helped offset the 9% drop in Lloyds’ net interest income, as they competed for business with cheaper loans while placating savers with higher rates.

 

And that concludes another UK Property News Recap – 26.07.24. Should you have any questions or comments, please get in touch here.