The past few months has seen a great deal of turbulence in the property markets. Political uncertainty and rising cost pressures across all sectors of the economy mean that everyone – whether they are a business owner, a landlord, a tenant or a homeowner – has probably been affected in one way or another.

Here Maunder Taylor, house valuation surveyors in Potters Bar, Hertfordshire and north London, take a look at some of the more recent trends and news relating to the residential housing sector in particular.

Deposit-Free Mortgages

The Skipton Building Society has announced it will be offering mortgages which will not need a deposit. Their deal will be available for a minimum five-year term, at an interest rate of 5.49%, which is more expensive than the average five-year fix of 5%. However, buyers won’t need a deposit, provided they can prove they have 12 months of on-time rental payments and a good credit history.

There are other deposit-free schemes on the market; however, with these, applicants must have the financial support of family or friends. Skipton’s move, which is designed to solve the problem of renters being unable to put enough money aside for a deposit, has been largely welcomed by the property sector. However, Will Barber Taylor from Generation Rent says there still aren’t enough affordable homes to buy.

Interest Rates Rise

On Thursday the Bank of England announced that the base rate would increase from 4.25% to 4.5% – the 12th successive rise in a row. It also means the base rate is now at its highest level since the 2008 financial crash.

This decision, which was taken in a bid to damp down inflationary pressures in the economy, normally feeds through into the rates that lenders charge for mortgages within a day or two. This will affect homeowners and tenants alike (many buy-to-let landlords may seek to increase their rent to cover their own mortgage costs). However, the Bank says the UK is likely to avoid a recession this year, so there is a prospect of a recovery in the longer term.

The Housing Market is Still Buoyant

The number of people securing mortgages has still been rising, even though the cost of borrowing has been increasing. In March this year – the latest month for which figures were available – 52,000 people had their applications approved, up from February’s figure of 44,100 (a rise of 18%).

The figure has been helped by the stabilising of the financial markets. Last year’s borrowing costs rocketed following the mini-Budget during Liz Truss’s short term as Prime Minister. The promise of billions of pounds of tax cuts without explaining how they would be paid for sparked turmoil on the financial markets.

Now, though, The Nationwide Building Society is predicting there will be a ‘modest’ recovery in the housing market. And in April the Society pointed out that the price of an average home in the UK rose by 0.5%, following seven months where this headline figure fell.

But Renting is Still a Problem for Tenants

Property website Rightmove says that monthly rents have hit new records. Average asking rents outside London have reached a record of £1,190 a month on average, they said, while in London they have risen above £2,500. The number of properties on the rental market has increased recently – between January and March this year the figure was up 8% on the year before – but demand is still outstripping supply.

This means there has been fierce competition among tenants looking for a property, with the Royal Institute of Chartered Surveyors describing the demand as ‘frenzied’ in many parts of the country. Some landlords have been selling property when their current tenant leaves; others have been deterred by recent tax changes and new safety regulations. All these factors mean there are fewer homes to rent on the market.

Housing Targets are Scrapped

In December, the Government announced it would be scrapping its target of building 300,000 new homes a year ‘by the mid-2020s’. This was down to a combination of factors, including the coronavirus pandemic (when lockdowns made it more difficult for construction companies to operate) and inflationary pressures which pushed up the price of raw materials. There was also concern from backbench Conservative MPs that setting an arbitrary target would undermine the work of local planning authorities.

The Government says it is still committed to building homes but their decision will limit the supply of new properties coming onto the market.

Potential Changes to Leasehold Legislation

At the moment, around 10 million Britons are living in a leasehold property, making them liable to additional fees such as ground rents and service charges. Housing Secretary Michael Gove announced he wanted to end this ‘feudal’ system but, the Guardian reports, instead of an outright ban on leasehold properties, there will be:

  • a cap on ground rents
  • more powers for tenants to choose their own property management company
  • a ban on building owners forcing leaseholders to pay any legal costs incurred as part of a dispute.

The Guardian says the Prime Minister’s officials ruled out a complete leasehold ban as there would not be enough time to get all the legislation through Parliament before the next general election. Mr Gove’s official announcement is due next month.

Maunder Taylor – House Valuation Surveyors in Potters Bar

Whether you are a landlord or a tenant, a homebuyer or a commercial property investor, or have any legal issue relating to your home or business, then North London estate agents Maunder Taylor offer a complete range of services.

You can contact us by following this link and filling in the online form, or by calling either our Whetstone office on 020 8446 0011 or our Potters Bar office on 01707 665 666 if you have any residential management queries.