This week, leasehold was handed an eviction notice as commonhold prepared to take its place. Meanwhile, tenants saw rental inflation slowing, and buyers’ price rises slow. Over in construction, levels plummeted amid a bleak economic outlook, curtailing any hope of reaching Labour’s 1.5m housing target. Welcome to another UK Property News Recap – 07.03.2025.
Leasehold is shown the door
On Monday, housing minister Matthew Pennycook put a deadline on the leasehold system, promising to abolish it by the end of this parliament making commonhold the default. A new white paper set out strict rules on how commonhold buildings would be run, so as to reassure mortgage lenders that they will not fall into disrepair. In addition it states commonholders will be allowed to split their buildings into separate sections so that only those who benefit from certain amenities have to pay for and run them. Leaseholders see the light at the end of the tunnel, but freeholders will no doubt try to put up legal road blocks.
This promised reform will be welcomed by leaseholders especially given mounting distrust towards freeholders and managing agents demonstrated in the class action lawsuit currently underway to recover hidden insurance commissions from freeholders and brokers. That said, to make something “common” place it has to take “hold.” Doing this could still be financially costly for leaseholders unless marriage values reduce significantly. It also could create division between those that can and those that can’t afford to do it. Lastly, expect some opposition from freeholders who initially invested for their future and not others.
Mortgage approvals fall in January
In the Bank of England’s Money and Credit report for January 2025, buyers took a step off the gas as rates crept up and the chances of making the stamp duty deadline fell. This resulted in net mortgage approvals for house purchases falling by 300 to 66,200 however the amount of mortgage debt rose as buyers borrowed more and those already indebted renewed at a new higher rate after the promise of lower interest rates never materialised.
Zoopla Rental Index
In Zoopla’s latest rental market report for 2025, UK rental prices further slowed due to affordability thresholds being breached, first-time buyers checking out and tenants opting to stay put.
As a result, the average newly listed UK tenancy cost £1,284, an annual increase of 3% in January 2025, according to Zoopla.
Demand was noted to have reduced but competition remains at double pre-pandemic levels. This will keep prices elevated as landlords, deterred by increased rates and new legislation, check out.
The building revolution remains on hold
The start of the year which came with such promise and developer “optimism” was curtailed due to the promised economic recovery remaining a way off. As a result, private housebuilding fell 10% in the three months to the end of February, 12% down against the same period last year. At the same time, social housing construction, dropped -24% compared to 2024 and by 12% during the Index period, according to Glenigan Construction index.
This was echoed in S&P Global’s UK Construction PMI, which showed output took a turn for the worse as elevated rates continued to deter investment, with residential building decreasing for the fifth month in a row and civil engineering activity also nose diving.
At the same time, despite the number of housing projects granted planning permission increasing by 15% in the final quarter of 2024 overall, 10% fewer housing projects secured approval during 2024 than during the previous year. This resulted in the total number of units, 242,610, falling to the lowest total for any calendar year since 2014. For the Government to achieve its target of 370,000 new homes per year, the National Housing Federation- New Housing Pipeline report found planning approvals would have to rise by 53%. Unless planning officers are just going to blindly green light everything, 300 additional planning officers, even with a national planning framework guide book, seems like a drop in a very large ocean.
The housebuilding revolution remains on hold till economic reassurance can be reasonably assured…
Foxtons’ end of year results 2024
Foxtons’ end of year results for 2024 showed improvement but the overall culture needs work.
Group revenue increased 11% to £163.9m with sales revenue seeing a 31% uplift off the back of first time buyers reaching for the first rung on the housing ladder before it rises further upwards. This activity also helped boost the company’s financial services offering by a further 6% as the group tried to tie in sales with their preferred broker.
UK House prices dip in February
House price growth was hesitant in February as UK prices took a -0.1% step back making the average property price now £298,602, according to lender Halifax.
Annual growth however remained steady at +2.9%, however Scotland saw house prices rise at the fastest pace in 13 months, up 3.8%. Northern Ireland, was unchanged in February but remained the strongest performer with annual growth up 5.9%. In Wales, prices rose 2.8% and in England, Yorkshire and Humberside, 4.1%. Meanwhile, Londoners saw annual house price growth ease from +2.6% in January to +1.6% in February as first time buyer momentum slows as they prepare to pay more stamp duty.
LISA’s due a long overdue refresh
The LISA savings debate continued on Friday as rising house prices continue to make the scheme defunct for those looking to buy a home they like in an area they want to live in if it exceeds the £450,000 limit. The Government needs to stir the now stagnant savings pot if it wants to encourage more savers to pour their cash in.
Lenders to be given more flexibility to boost homeownership numbers
The FCA has today laid out a schedule of consultations with the aim of updating current lending criteria to further improve access to mortgages.
March/April – Call for evidence on current and alternative approaches to stress testing.
May- Launch a consultation proposing early ideas to simplify its rules and benefit mortgage consumers, making it easier to:
- remortgage with a new lender
- discuss their options outside a regulated advice process
- reduce their mortgage term
June – A public discussion on the future of the mortgage market considering what the market needs to deliver for different consumers at different stages in their lives and the wider UK economy, and the role of regulation to deliver it.
And that concludes another UK Property News Recap – 07.03.2025. If you have any comments or suggestions, please get in touch.
