Update: August 2023
“Anti-Landlord” Renters Reform Bill
We have already done quite a lot of articles on the recent Renters Reform Bill which has recently been branded an “Anti-Landlord” Bill.
There are various reforms that will make it more difficult for landlords such as harder to secure repossession orders, tenants have been given formal rights to keep pets in their rented property. Privately let properties must each have a new decent home standard and landlords will be obliged to sign up to a new ombudsman scheme.
One of the most controversial parts of the act will be abolishing the no fault evictions, commonly known as, section 21 notices.
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Leaseholders will not be abolished this year
The Government have promised that they will be abolishing leaseholds for some considerable time. Unfortunately, it will not be anytime this year. An undertaking to scrap the contentious leasehold system was given by the housing secretary Michael Gove although legalisation decides to improve lots of leaseholders is now promised later in the year. We understand the proposals will not include a day for the abolition of the outdated property ownership known as leasehold.
Stricter fire regulations make inventories more important
In the recent news storey drew a connection between making an inventory and complying with ever strict fire regulations in a let property.
The new regulatory reform “fire safety” order and the smoke and carbon monoxide alarm “amendment” regulations impose an obligation on landlords to reduce the risk of fire in every way reasonably practical. They need to ensure the safety of their premises by installing smoke alarms and carbon monoxide detector.
Unfortunately, the fire rescue services are attending more than 33,000 domestic fires in the UK each year. It underlies the important role that landlords can play and improving fire safety in their property. Drafting and conducting an inventory at the beginning of every tenancy offers the perfect opportunity to ensure that those fire precautions are taken.
Average 20 viewings for each rental property listing
Rental properties are attracting huge amounts of numbers currently. The BBC published a report this week stating there was 20 viewing requests on average for every property. The figures, which are from the property portal Rightmove, highlight the balance of homes to rent at this moment in time. According to the data, the number of request to see each home has more than tripled from 6 in 2019. Ques to view properties are even longer in certain regions, with average of 30 viewings per property in the North West of England. The research also revealed that the supply of homes to rent is decreasing. In the first quarter of 2023 33% of private landlords in England and Wales said they planned to cut the number of properties they rent out.
New planning permission rules for holiday lets in tourist hot spots
New short term let rules are being considered to protect England’s holiday destinations. This mainly is properties in effect where they are used as Air BnB’s. How does this affect the property market?
The Government is proposing new rules for holiday lets to protect local communities in tourist hot spots.
Homeowners in England will be required to get planning permission before renting out their property as a short term. The move aims to help local people from being priced out the property market in areas that are popular holiday destinations.
Under the new rules, which is currently out of consultation, homeowners in England will be required to get planning permission for renting their property out for a short term let.
The whole idea of this is to prevent local people from being priced out of the property market in areas that are popular destinations. This was proposed by Michael Gove, accepting state for levelling up housing in communities who said “tourism brings many benefits to our economy but in too many communities we have seen local people pushed out of cherished towns, cities and villages by huge numbers of short term lets.
I am determined that we ensure that more people have access to local homes at affordable prices, and that we prioritise families desperate to rent or buy a home of their own close to where they are”.
Why do the Government want to do this?
The popularity of short term lets has soared in recent years due to various combination of platforms, such as Air BnB, and a rise in people opting for staycations following the Covid – 19 pandemic.
There has been a jump in availability of holiday properties which is good for tourists, but local people in some tourist hot spots have found themselves priced out the property market.
There have been complaints that certain popular destinations have become ghost towns outside the holiday season. This means that local people face labour shortages due to the lack of affordable local accommodation to rent or buy.
Who in the market does it affect?
The move is potentially good news for people who live in tourist hot spots who are struggling to get on the property ladder, as it should help to ensure that the house prices are more sustainable.
This is less good for people who have hoped to invest in a holiday let in a popular area, particularly if they are considering this as an alternative to a buy to let property. Especially, after the significant tax rises in recent years.
However, the biggest impact could be homeowners in holiday areas who would want to rent out their home on an occasional basis while they go away themselves.
The consultation is looking to see whether homeowners should have the flexibility to rent out their property for a set number of nights. Such as 30, 60 or 90 each year without needing to obtain planning permission.
What is the background to this?
The proposals have come from the department of culture, media and sports. It launches a separate consultation on a new registration scheme for short term lets.
The scheme aims to build a picture of how many short term lets there are across the country and where they are located to try and understand what impact short term lets have on local communities.
The Government understood that the benefits for tourists of flexible short term lets offers but this should not come at the expense of local people.
Inflation Doubly High but mortgage rate edge lower
We have now seen mortgage deals available at some four rates. Inflation is still expected to fall quickly in the second half of this year.
Inflation remains still high suggesting that the Bank of England will increase rates further. The rates in which the cost of goods and services are rising has been measured by the consumer price index which fell slightly. But, nothing of significance.
The fall was much lower than economists have been expecting. Inflation is still more than five times higher than the Bank of England’s 3% target rate.
People are predicting that the bank’s mortgage policy committee will increase the bank rate again in May. In order to speed up the increase of reducing inflation.
However, despite increasing rates, mortgage rates continue to seem to fall with best buy deals currently available with rates just less than 4%.
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Why do we think this is happening?
Whilst inflation has remained stubbornly high despite the Bank of England increasing the interest rates. The high level of inflation is mainly driven by a number of factors. To include the conflict in Ukraine, food prices and energy prices being higher than normal.
The weather has not helped being hot in Asia and cold in Europe which has increased the demand for electricity to power air con and heating which was hit when Ukraine was invaded.
Adverse weather has also now impacted some food production. The hot weather across Europe affecting salad and soft fruit crops will droughts in Argentina have been affecting harvests.
Most economists are expecting inflation to start falling quickly in the second half of the year especially as predictions for the steep price falls in gas and electricity prices.
What should I do if I have to re-mortgage?
It is always difficult to know what to do in the mortgage market. Especially if there is a potential increase coming through next month. However, some mortgage rates have been actually moving in the opposite direction. Average costs of a 5 year fixed rate mortgage falling by 0.23% since October.
If you need to re-mortgage, you will have to decide whether or not to opt for a fixed rate deal or a tracker product.
It is totally a matter for you. The fixed rate will be the amount of interest you pay during the whole term of the product. Normally 2-5 years. A tracker the rate will move up and down inline with the bank rate.
It is difficult to know what to do but it is down to each individual persons circumstances.
What does this mean for the housing market?
It is difficult to know what the housing market will do.
Our view is that in certain areas the market may well come down with interest rates still increasing. The demand will slightly fall as we have seen from the least amount of mortgage applications. This will impact the market over a period of time but it should stabilise in this regard.
Rental marketing report; what is happening to the rental market?
When will the cost of renting start to low and will landlords need to reduce rents in future?
Zoopla believes that the following will take place;
- Renter inflation has slowed to 11.1 from a higher 12.3 in mid 2022.
- A strong label market and record immigration drove demand in 2022. Private rented housing supply has grown just 1% since 2016.
- Higher mortgage rates have further weakened the economics of investing for landlords, impacting new investment in rental supply.
- Landlords searching for yields to offset rising costs will push some lets into different sectors of private rental markets.
- The growth in overall rental supply is set to remain limited in 2023. Demand is expected to remain above average but lower than 2022.
- Rental inflation for new lets will slow to 4-5% by the end of the year. The slow down could be rapid in London and other city centres.
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Overall, the rental market has been running hot for some 2 years. Average rents have been increasing quite substantially over a period of time but will this stop?
Zoopla believe that there are various underlying drivers of rental demand such as the following;
- Strengths of the jobs market.
- High economic immigration.
- Rapid growth in oversea students to add to demand.
- Supply of rental homes remain broadly static.
- Landlords may well sell which will reduce the market.
The will be variations in available property type in certain areas.
It will be an interesting year this year to see what happens to the rental market overall.