This week, speculation around CGT increases was rife, confusing investors and causing landlords angst over whether to sell now or hold out. Some landlords, faced with EPC changes and new legislation, had already decided this was the final straw and downed tools. Others, undecided, remain poised, ready to act, depending on the budget outcome. This still stands despite news on Thursday that Capital Gains on the sale of second homes were to be spared further taxation in favour of shares in property portfolios. Despite all the conjecture, business owners and the wealthy are sweating, the sooner the plaster is ripped off the better. Welcome to another UK Property News Recap – 17.10.2024.
BlackRock Bulks Up
BlackRock built up its share proportion in Leicestershire-based brick manufacturer Ibstock from less than 5% at the beginning of March to almost 12%. The asset manager opting to invest while the price is cheap before the expected Labour-backed housing boom takes off.
Mortgage Rates take a step back up
Average mortgage rates tiptoed back up on the previous working day on Monday, as swap rates rose as a result of: budget speculation, BoE base rate cut chat and the persistent war, currently escalating, in the Middle East.
- The average 2-year fixed residential mortgage rate went up to 5.37% from 5.36%.
- The average 5-year fixed residential mortgage rate went up 5.06% from 5.05%
- The average 2-year buy-to-let residential mortgage rate went up 5.26% from 5.25%
On Friday, they had increased again:
- The average 2-year fixed residential mortgage rate went up from 5.40% to 5.41%.
- The average 5-year fixed residential mortgage rate was 5.09%, unchanged.
- The average 2-year buy-to-let residential mortgage rate went up from 5.26 to 5.27%
- The average 5-year buy-to-let residential mortgage rate was 5.28%, unchanged.
Many borrowing bets will be being placed on whether to stick or twist now
Bellway has a rough start to the year
Developer Bellway’s preliminary results to the year-end July 2024 showed the group had a tough start to the year, their underlying profit before taxation was down £532.6m in 2023 to £226.1m, but with reservations on the rise, up 10.9% to 0.51 from 0.46 in 2023, hopes are high for a gradual comeback should rates continue on a downward trajectory.
The foot came off the inflation “gas”
The ONS Consumer Prices Index showed inflation fell below the Bank of England’s 2% target to 1.7% in September 2024. This was lower than expected causing investors to adjust their bets in favour of another cut in November causing the pound to fall.
This will give those looking to move or remortgage hope but expect the betting stakes to continue to yo-yo till the Bank of England meets on the 7th of November.
Rightmove rental growth update
Another month, another quarter, another rise in rents. Despite the rate of growth slowing and tenant demand reducing to 15 enquiries from 23 on average, prices continue to rise – up 5.2% from last year.
Yet there are signs that affordability thresholds have been breached as a 5th of rental properties are having to reduce before finding a tenant.
Sales hot up over the summer
The summer market may have been slow, but prices continued to heat up. Average annual inflation for UK house prices increased from 1.8% in July to 2.8% in August 2024, making the average UK house price £293,000, £8,000 higher than 12 months ago.
Annually, prices across the country were “moving on up”, but the South West took another hit in August as it continues to struggle to make up lost price ground.
Average house prices across the country in the 12 months to August 2024:
– England up 2.3% to £310,000
– Wales up 3.5% to £223,000
– Scotland up 5.4% to £200,000
– Northern Ireland up 6.4% in the year to Q2 to £185,000
Growth slows but rents continue to squeeze
The speed of rental growth went down a few gears in September 2024 but prices continued to roll forward.
The average rent in the UK increased 8.4% to £1,295 per month on September last year, further squeezing tenants’ already diminished budgets.
Across the country – annual average rental growth in September 2024:
England up 8.5% to £1,336
Wales up 8.3% to £760
Scotland up 7.2% to £973
(Northern Ireland up 9.5% in the 12 months to July 2024)
Newham Council gets downgraded
Newham Council was the first council to be awarded a C4 rating, the lowest grade for performance. The regulator found 20% of its homes were not meeting the Decent Homes Standard and 9,000 homes were overdue fire safety remedial actions, 4,000 of which were categorised as high risk. Though no enforcement action is being taken at present the regulator will be watching for active steps.
Second homes spared capital gain tax increases
The Office for Budget Responsibility picked holes in the Government’s decision to increase CGT on second homes and buy-to-let properties as it would cost more money. As a result, the Treasury is expected to increase capital gains on profits from the sale of shares instead.
PCL buyers shop around for a bargain
Buyers, concerned by tougher wealth taxes, can shop around in prime central London, to secure a luxury property at a discounted price as sellers, equally concerned, look to move out.
According to Lonres, in PCL, instructions were up 32% year-on-year between July to December but agreed sales were down 38.5%. The number of price reductions on £5 million + homes rose 39% between July and September from a year earlier.
Social Housing gets hit (again)
The Regulator of Social Housing’s latest annual Sector Risk Profile reported that the cost of servicing debt exceeded net earnings across the sector for the first time since 2009. As Landlords look to make good on existing stock, funds for reinvestment remain limited.
To combat this, Barclays and Lloyds have made a deal with the National Wealth Fund to lend £1bn for social housing retrofit at “competitive rates.” The thing is…a loan still needs to be paid back.
Clocking up value
Housing prices accumulate the most over time in more expensive areas that are well-connected.
Over the last twenty years, house price growth has increased by 78%, making the average gain on a property bought within the last twenty years £80,001. Over the past ten years, this has dropped to an average of £65,000 on 48% of homes.
London and the South East had the highest proportion of homes (71 & 70% respectively) increase in value by £65,000. Scotland and the North East the least, around £40,000-45,000.
And that concludes another UK Property News Recap – 17.10.2024. If you have any comments or suggestions, please get in touch here
