Darren Murphy’s Market Update
My last update focused on the measures being introduced by Rachel Reeves’ budget at the end of October.
We have now had a month to consider the implications from those announcements and the Chancellor and the Government have come under increasing criticism from many about the actions proposed and the knock on effects that will result.
Changes within the property market were largely based around increases in stamp duty for those purchasing second properties. This, of course, affects landlord investors and there has undoubtedly been some reduction of interest from private landlords in expanding their portfolios.
Whilst many small landlords were already exiting the market due to the increasing burdens of legislation, with higher entry costs and rent affordability being squeezed by general financial pressures on tenants, we will likely see a reduction in rental supply.
The Renters Rights Bill is currently working its way through Parliament and is expected to become law early in 2025.
Key elements of this proposed legislation are:
The end of fixed term tenancies. All tenancies will, on implementation date, become periodic tenancies and subject to a two month notice period from the tenant.
The end of section 21 notices – often emotively referred to as “no-fault” evictions. This will create a situation where a landlord can only reclaim possession of a property if the property is to be sold or reoccupied by the landlord.
Grounds for possession in situations of non-payment of rent, damage and anti-social behaviour will still exist but the commencement of proceedings will be longer than at present.
In reality most landlords do not want to evict a tenant and certainly not if the property is being well maintained and the rent paid, as agreed.
Another key element in the legislation will be that so called “bidding wars” where tenants bid upwards on a rental asking price will be come illegal. This however is likely to simply result in properties to rent being marketed at higher rental figures and bids being managed below the asking price.
Landlords will still be able to increase rents but only annually and at market value which, if contested, will be set via a tribunal.
All landlords will need to be registered with a new ombudsman scheme and on a national database, where relavant documentation etc will be stored.
A lot to digest and, in order to help people negotiate these potentially choppy waters, we held our first landlord event on Wednesday 27th November at the Battle of Britain Buker in Uxbridge.
The event was over-subscribed and a full house listened attentively and asked questions of members of the Christopher Nevill team who talked about the key issues that could be going to affect landlords and investors. Whilst much of what was discussed could have been seen as a threat, the other side of the same coin is opportunity
We and the general feeling was and, whilst there will, undoubtedly be some short term issues, these will be resolved and things will settle into a new order. We shall certainly be helping our clients maximise the performance of their investments.
We are already planning our next landlord event and will be announcing soon.
During the last month we saw the Bank of England reduce the base rate by 0.25% to 4.75% but this downward trajectory may slow as the latest inflation figures rose from 1.7% to 2.3% and, as the higher costs from budget decisions take hold, are likely to remain at or above the Bank of England target of 2% for the foreseeable future.
Activity in both the sales and lettings markets is fairly constant and where sensible pricing is applied, motivated sellers, buyers, landlords and tenants are getting successful transactions agreed.
Yours
Darren Murphy
