This week the leasehold reform bill was picked at and spat out, MPs and Lords requesting a new serving. Lenders released their March data menu, some offering specials to first-time buyers to gain some free advertising. Transaction volumes increased…marginally….and affordability improved in some regions. Welcome to your weekly UK Property News Recap – 29.03.2024

 

Leasehold Reform Bill reimagined 

For Michael Gove, this week was not a good week. Best laid plans were critiqued and revised, leaving a bill that doesn’t reflect what was originally ordered. 

 

First, pension funds and investors laid down their ultimatum, claiming dent in their  ground rent income would have to be compensated for. Given this would ultimately be paid out of taxpayers money, hopes for ground rent reform and freedom from the shackles of leasehold were crushed. How Gove overcomes this remains unclear. 

 

The Lords then continued to push the leasehold reform act around in their chamber, requesting a host of amendments such as: court readiness to process evictions and a six month tenant ban from leaving. Never satisfied, they continued to try to pacify landlords while further frustrating renters, causing yet further disillusionment all round. 

 

The only positive political course of action was a cross-party consensus to make it harder to repossess properties from leaseholders. Discussions commenced on how to change the outdated system, which enables freeholders to repossess a property if there is a breach of the lease, for example not paying the ground rent or service charge, even if it’s being disputed. 

 

UK stock is ‘worst value for money’ 

The think tank. Resolution Foundation, spent time collating OECD data to compare the UK’s housing issues with other similar economies. Unsurprisingly, they concluded UK stock was crapped, old and badly insulated giving the UK the prize for the country offering the ‘worst value for money’. Despite this, people still want to live on the island. All those beautiful period properties with their quirks and idiosyncrasies must appeal. Who wouldn’t want to live in a country where a hot water bottle is a necessity if living in any Grade Two listed house, or top of everyone’s wish list: a leasehold property wrapped in flammable cladding…? I mean, who could refuse:)

 

ONS – Housing affordability in England and Wales: 2023

After spending frivolously during and just after the stamp duty holiday, annual average earning ratios when buying a home reduced in 2023 from 8.5 times to 8.3 times, or to 6.1 times in Wales. This provides about as much comfort as a blow-up mattress. 

 

 

Despite wages rising, house prices have a head start. At a national level, homes were affordable on average at the start of the ONS Housing affordability series until 2002, and not affordable after. The cause? Rates. These steadily fell over the following years enabling buyers to pay and buy more.

 

Second staircases lead nowhere

It’s a year and 3 months on from when the DLUHC published a consultation paper on plans to mandate second staircases on blocks over 18m, and the government is yet to publish its guidance on specification. This is causing developers to put schemes on hold till they know what is required, delaying the development of much needed houses. It’s almost like the government doesn’t know what they are doing….hum

 

Bellway pins hopes on 2024 buyer activity

Developer Bellway excitedly shared information they are allowed to talk about as opposed to the commercial sensitive information they aren’t, showing their average private residential rate is up from 0.43 per site per week in the 6 months to the end of January to 0.67 since February 1st. Incentive sweeteners also stabilised at around 4%-5%, given the developer hope for 2024 sales.

 

Yorkshire Building Society offers first-time buyers mortgages with only a 1% deposit

In an attempt to drum up some PR, Yorkshire Building Society launched a new product designed for first-time buyers with £5,000 to spare. For this they would get a high mortgage rate for 5 years, at 5.99%, on a property worth up to £500,000. The deal excludes flats and newbuilds, perhaps in an attempt to lessen the risk of negative equity from new build premium prices and by encouraging investment in homes with room to grow. 

This will only appeal to a small number of buyers, out of the capital, who earn well, want out of the rental market and are keen to put down roots. 

 

Lender Halifax promotes the merits of buying over renting

Despite mortgage rate hikes, owning a home in London, Scotland and the South West of England remains cheaper than renting, according to Halifax data. However, over the next few years expectations are for other regions to follow suit, making the appeal of buying while prices are down preferable…Halifax hopes.

 

 

Zoopla March House Price Index

In Zoopla’s March HPI, annual house price inflation remained in negative territory but slowed to -0.3%, up from -1.4% in October 2023. Weighed down by affordability issues, Eastern (-2.3%) & South East (-2%) regions still have a long way to go in retracing their 2023 steps in comparison to Northern regions.

 

 

Discounted rates also reduced on average from 4.5% in November to 3.9% in March 2024. This brought out buyers from their 2023 hibernation, looking to secure a deal while the number of sales agreed, which increased 9% on last year, which in turn encouraged sellers to “spring” into action; stock level increasing by 20%.

 

 

The UK Housing department deliver their first cladding bill 

The Yianis Group got their first brown envelope for remedial cladding work courtesy of Gove, to the tune of £20.5m

 

This noble attempt by Gove to extract money from John Christodoulou’s Yianis Group to contribute to fixing safety issues at the Canary Riverside development publicly looks good, but will the government ever receive it? While we wait for the case of Freeholder v Gov to be heard, hundreds of leaseholders’ lives remain in limbo perpetually waiting.

 

Transaction volumes increase…a bit

Residential transactions, when seasoned, limped forward by a percentage point between January to February 2024. This is the second consecutive month-on-month increase, rising from 81,930 in January 2024 to 82,940 in February 2024. When not peppered, non-seasonally adjusted residential transactions increased by a larger percentage, up 9% in February 2024 relative to January 2024. So buyers are on the move, but in droves, they are not.

 

 

And that concludes another UK property News Recap – 29.03.2024. Should you have any comments or suggestions, as ever, please get in touch here.