UK Property News Week 40

Welcome to NestInsights, your guide to the evolving UK property market. In this blog series, we explore the latest property news and developments that shape the sector, offering you the insights needed to navigate and thrive. Our goal is to provide a comprehensive overview that empowers you to make well-informed decisions in this dynamic market.

Table of Contents

• Mortgage Approvals Reach Two-Year High: A Positive Outlook for the Housing Market

• The Next Generation of Landlords: Who Are They?

• Preparing for Major Legislative Changes: Urgent Steps for Property Agents

• Britain’s Housing Markets: A Closer Look at the Fastest and Slowest Regions

• UK Property Market on the Rise: Increased Demand Fuels a 25% Surge in House Prices

UK Property News Week 40

Mortgage Approvals Reach Two-Year High: A Positive Outlook for the Housing Market

The UK housing market received a significant boost as mortgage approvals surged to a two-year high in August 2024.

According to the Bank of England, 64,900 home loans were approved, up from 62,500 in July.

This marked the highest level of approvals since 2022​. The resurgence in mortgage activity is a welcome sign of stability and growth for the property sector, particularly as the market continues to recover from recent economic challenges.

Several factors are contributing to this rise in mortgage approvals. Most notably, a reduction in mortgage interest rates has played a pivotal role. As borrowing costs decrease, more prospective homebuyers are securing loans, fueling demand in the housing market.

Additionally, approvals for remortgaging have also risen, with 27,200 approvals recorded in August, up from 25,200 the previous month​. This indicates that many homeowners are capitalizing on favorable rates to refinance their existing mortgages.

The Bank of England's decision to reduce interest rates has further buoyed market confidence. Although the central bank’s monetary policy remains cautious, the base rate reduction has opened doors for more competitive mortgage products, providing greater flexibility and choice for buyers​.

Many industry experts expect this trend to continue, predicting mortgage approvals to rise further to 67,000 in the coming months as borrowing rates continue to decline​.

The increase in mortgage approvals is not only reflective of lower borrowing costs but also of an overall positive shift in market sentiment. After a period of uncertainty and fluctuating demand, homeowners and prospective buyers are returning to the market with renewed confidence. This is especially evident as property values have started to stabilize, with house prices rising 3.2% year-on-year as of September 2024​.

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The Next Generation of Landlords: Who Are They?

As the early pioneers of the buy-to-let market reach retirement age, a new wave of landlords is stepping up to meet the demand for rental housing in the UK. This next generation of landlords, largely aged between 25 and 44, represents a shift in both demographics and investment strategies. A recent survey by Paragon Bank sheds light on who these emerging landlords are and what motivates their property ambitions.

The average age of these aspiring portfolio landlords is 37.8, with the largest group aged between 25 and 34 (35%), followed closely by those between 35 and 44 (31%)​.

Most of these new landlords are already higher-rate taxpayers (75%) and are balancing full-time jobs with their property ventures​. Additionally, more than half of them (51%) have some connection to the property sector, either through related professions or family ties​.

Geographically, over 40% of these landlords reside in London and the South East, with a smaller yet significant proportion (12%) located in the North West​. This distribution aligns with regional differences in rental demand, investment opportunities, and property prices.

The motivations driving this new generation into the property market are varied but primarily rooted in financial goals.

A significant 67% of respondents chose property investment because it is a tangible asset, offering security in comparison to more volatile markets​.

Moreover, 60% view property as a response to the enduring demand for rental housing, particularly in urban areas where the rental sector continues to expand​.

Interestingly, over half (53%) see property as a long-term investment vehicle to supplement their pensions, indicating that many are looking beyond short-term gains​. As a reflection of their financial acumen, 38% of these landlords financed their first rental properties through buy-to-let mortgages, while 36% managed to purchase their properties outright​.

Preparing for Major Legislative Changes: Urgent Steps for Property Agents

The property sector is on the brink of one of the most significant regulatory shifts in decades, with the upcoming Renters’ Rights Bill expected to transform how agents and landlords operate. This legislation introduces a host of new obligations, protections, and procedures, meaning property agents must act swiftly to stay compliant and maintain their competitive edge.

Key Legislative Changes

• The Renters' Rights Bill, currently progressing through Parliament, brings forward major reforms such as the abolition of Section 21 no-fault evictions, the introduction of periodic tenancies, and changes to rent increase processes. Property agents are expected to play a pivotal role in helping landlords and tenants navigate these new regulations​.

• The removal of Section 21 will significantly alter the eviction landscape, requiring landlords to rely on clear, specified grounds for possession. This will necessitate a more detailed and formal approach to managing tenancies, including accurate record-keeping to justify any eviction decisions.

• The Bill will replace fixed-term tenancies with periodic tenancies, allowing tenants more flexibility to end their rental agreements with two months' notice. Agents should review existing tenancy agreements to ensure they comply with these new rules​.

• Under the new legislation, rent increases will need to follow a stricter procedure, where landlords must issue a Section 13 notice for any rent rise, and tenants will have the right to challenge excessive hikes via a tribunal. Agents must help landlords understand these procedures to avoid disputes​​.

Immediate Steps for Property Agents

• Agents should immediately begin reviewing all tenancy agreements to ensure they align with the new legislation, particularly with regard to rent increases and the abolition of fixed-term contracts. Contracts must be updated to reflect periodic tenancies and provide clarity on the new grounds for possession.

• Staying informed is critical. Agents should participate in webinars and training programs to better understand the finer points of the Renters’ Rights Bill. Organizations like Propertymark are offering resources, including webinars and training courses, to ensure agents are equipped to implement these changes​.

• With the increased complexity of managing tenancies under the new laws, agents should evaluate their fee structures. As the demand for more detailed administrative work increases, agents may need to adjust their fees to account for the additional time spent on compliance tasks such as serving formal notices and handling rent disputes​.

• The Bill also prohibits rental bidding, ensuring that agents and landlords can no longer accept offers above the advertised rent. This means agents must implement transparent marketing practices and provide accurate rent figures to avoid legal consequences​.

• Agents who act now to integrate these changes will not only ensure they remain compliant but also position themselves as trusted advisors for landlords navigating this new legal environment. The transformation in tenancy structures and eviction protocols presents both challenges and opportunities for agents who are prepared to adapt.

Britain’s Housing Markets: A Closer Look at the Fastest and Slowest Regions

The UK housing market continues to display significant regional variations in terms of how quickly properties are being sold. According to recent data, the average time to find a buyer across Great Britain is currently 60 days, though the pace varies significantly depending on the region. Here's a closer look at the fastest and slowest housing markets in Britain.

Fastest Housing Markets

Scotland leads the way with the fastest-moving markets, where properties in some areas are selling in under 20 days. According to Rightmove’s Speed of Market Tracker, Carluke in Lanarkshire is the top performer, with homes finding buyers in an average of just 15 days. Other fast markets include Giffnock (16 days) and Uddingston (17 days), both of which are commuter towns near Glasgow​.

The Scottish housing market continues to outperform, with an average time to find a buyer of just 33 days.

This speed is attributed to strong demand from buyers seeking affordable homes in regions with good transport links to major cities like Glasgow and Edinburgh. Additionally, buyers are motivated by the opportunity to gain more space further out from city centers, while still maintaining commuting convenience​.

Slowest Housing Markets

At the other end of the spectrum, coastal towns dominate the list of Britain’s slowest housing markets. Brixham in Devon holds the title for the slowest market, where it takes an average of 118 days to find a buyer. Other slow-moving markets include Skegness (115 days) and Sandown (109 days). These locations often face more challenges due to their higher property prices and reduced buyer demand, especially compared to urban areas​.

In London, the housing market displays a similar dichotomy. Walthamstow and Dagenham, both commuter areas in outer London, are among the city’s fastest, with homes selling in 32 to 42 days. By contrast, prime central locations like Knightsbridge and Chelsea are much slower, taking up to 135 days to find a buyer, likely due to the high price points associated with these premium areas​​.

Regional Trends

Regionally, the average time to sell varies:

• Scotland remains the fastest overall at 33 days.

• The East Midlands takes the longest, averaging 67 days.

• London hovers at an average of 63 days, with faster sales in outer boroughs and slower sales in the city center​.

UK Property Market on the Rise: Increased Demand Fuels a 25% Surge in House Prices

The UK housing market has experienced a remarkable upswing, with a significant rise in buyer activity driving house prices upwards. Recent data reveals that demand has surged by 25% over the past year, contributing to a substantial increase in house prices across various regions​. This revival is largely attributed to a combination of lower mortgage rates and pent-up demand from buyers who had delayed purchasing decisions due to economic uncertainties.

Key Drivers of Demand

The lowest mortgage rates in over 15 months have played a crucial role in boosting the market, making borrowing more affordable and enticing more buyers into the property sector.

As of August 2024, sales agreed have increased by 25% compared to the same period last year​.

Additionally, regions like the East Midlands and North-East have seen sales climb by as much as 30%, indicating strong buyer confidence outside of traditional property hotspots​.

This surge in demand is not only benefiting first-time buyers but also encouraging movement among existing homeowners. Many sellers, buoyed by the improving market conditions and favorable mortgage rates, have listed their properties for sale, increasing the volume of available homes.

Regional House Price Growth

While the national picture is one of rising house prices, there are notable regional variations. In some areas, such as the South West and South East, house prices have remained relatively stable due to affordability constraints. However, regions like Northern Ireland have seen prices increase by as much as 5.5%, reflecting stronger growth in areas that had underperformed in previous years​.

Takeaways

• Mortgage approvals hit a two-year high in August 2024, with 64,900 home loans approved, fueled by lower mortgage rates and renewed buyer confidence.

• The next generation of landlords is primarily aged between 25 and 44, with 67% choosing property as a stable investment in response to growing demand for rental housing.

• The Renters' Rights Bill will abolish Section 21 evictions and introduce periodic tenancies, requiring property agents to revise contracts and adjust business practices to ensure compliance.

• Scotland boasts the fastest markets, with Carluke leading at just 15 days to find a buyer, while coastal towns like Brixham in Devon lag behind at 118 days.

• Buyer demand has surged 25% year-on-year, leading to notable house price growth, especially in regions like the East Midlands and Northern Ireland, where sales are up by as much as 30%.

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