This week, Chancellor Rachel Reeves was busy in Davos trying to drum up business for the UK. In the process, she became a sycophant to the fleeing wealthy, listening intently to their various financial gripes and promising to ease their woes as they “klostered” around. Welcome to another UK Property News Recap – 24.01.2025.
New listing, New Year Pricing
Sellers, believing that New Year rate sales and first-time buyers keen to meet the stamp duty deadline would present a financial opportunity, got carried away and increased property asking prices by an average of 1.7% and listings by 11%, on the property portal Rightmove.
Despite this, agreed sales rose by 11%, though how long this trend will last remains to be seen.
Rate discounts have since been cancelled in response to record bond prices, which, although stabilising, have not yet reversed the recent interest rate increases by lenders. This has dashed hopes for better rates, at least until February, when the consensus is that the Bank of England will cut rates. While this would be welcome, if it happens, it will likely come too late for most first time buyers keen to meet the stamp duty deadline.
I’d argue this window generally closed back in November, but it could boost second-steppers in time for spring.
JLL’s day in court
Estate agency JLL went to court to seek permission to continue to manage Ding Yumei, the ex-wife of property tycoon Hui Ka Yan of Evergrande, currently frozen UK property rental assets. The properties in Nine Elms which are held through five companies registered in the British Virgin Islands reveal previous successful manoeuvres to hide money in plain UK sight. The ruling will enable the properties to continue to be maintained and JLL to get paid.
Reeves backs plans to lower limits on mortgage lending
Rachel Reeves at Davos this week claimed to back plans by the UK financial watchdog for looser limits on mortgage lending. These would include increasing the percentage of loans to those with smaller deposits, currently at 15% and considering buyers previous rental history reducing the size of deposit required.
This has all come about due to Reeves’ construction growth plan backfiring due to stubborn inflation and budget choices dampening interest rate cuts. Relaxing lending regulation to facilitate this is one thing but remembering why it was put in place to begin with is another.
It will enable more buyers to get on the ladder however it will also boost house prices. The worry is what is considered “responsible” risk isn’t just putting buyers, long term, at greater risk.
Short term political thinking needs to work long term for everyone.
Reeves says let it go
A “nature restoration” fund is to be set up to pay for the rehousing of those evicted from their natural habitat in favour of housing and infrastructure for others in need. The cost to fast track previously stalled projects will be determined by Natural England which will no doubt cost a bob bob bobin’ or two.
At the same time the law will be changed to enable development and squash environmental concerns. To do this for “nationally significant infrastructure” such as motorways, rail lines, power stations, pylons and onshore wind farms four key things will change:
-Three applications for judicial review to be reduced to a maximum of two by scrapping an initial “paper permission” stage before oral hearings.
-A High Court judge will be allowed to block appeals if the case is deemed without merit
-Timetable for proceedings to be agreed at the start of proceedings to speed things along
-The Court of Appeal and Supreme Court to be given time targets for deciding cases.
Regional prime property markets look set for growth
The prime regional market ploughed the property fields in 2024 in preparation for growth in 2025; annual price adjustment slowed to -1.0% in 2024, compared to -4.6% in 2023.
Moving forward, estate agency Savills projects 4.0% growth in 2025 and 23.4% growth over the next five years.
Rightmove Commercial Index
East Midlands and London lead the commercial sector comeback as investors consider industrial sites to service increased online sales and modernised office spaces. Rightmove data for Q4 2024 showed that demand to invest in commercial property of all types was up by 28% by the end of last year, the biggest year-on-year shift since Q2 2021.
Reeves again…
Chancellor Rachel Reeves, having had her ear torn off by investors in Davos is considering a minor tweak to the rules governing the three-year transitional regime to allow wealthy taxpayers to adjust to the phasing-out of non-dom status.
This will no doubt be music to UK prime estate agents ears but it’s going to take more than a nip and tuck to make them turn around.
London mansion sold at a discount for £139mn
A 207-year-old villa in Regent’s Park has been sold to an unknown buyer for £139 billion. Originally listed at £250 million in 2023, the UK buyer has chosen to put their “trust” in their identity remaining hidden by utilizing a legal loophole. At least until August, when new regulations are scheduled to take effect, allowing anyone to apply for information about trusts held in the register of overseas property owners, unless they are minors.
Affordability improves…a bit
A nationwide survey found that an increase in earnings over 2024 has moderately eased affordability pressures for first-time buyers, but these pressures remain well above the long-run average. However, the average cost of a home as a multiple of the average earnings of a first-time buyer also remains high, at 5.0, exceeding the long-term average of 3.9. If earnings continue to grow at a faster rate than house prices this year, buyers may have a fighting chance.
The deposit divide
Nationwide also found 40% of all first time buyer deposits were gifted or inheritance, leaving the other 60% to tough it out alone or buddy up. As affordability became increasingly stretched so the necessity for help grew; gifts and loans from the Bank of Mum and Dad nearly doubled in the last five years to £9.4 billion in 2023.
And that concludes another UK Property News Recap – 24.01.2025. If you have any comments or suggestions, please get in touch.
