0:01 AM, 8th June 2023, About A year ago 3
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Storm clouds are looming over the UK’s property market with some good news being overshadowed by potential interest rate hikes and landlords looking to leave the private rented sector (PRS).
The Royal Institution of Chartered Surveyors (RICS) says that house prices and agreed sales – along with buyer demand – have fallen again, although it is not as much as had been feared.
However, new instructions were up for the first time since early 2022 but concerns around inflation will put the sector under pressure in the months ahead.
Its UK residential market survey also highlights that demand continues to surpass supply in the PRS which is putting a strain on rental home availability.
And this situation is being made worse by rising interest rates and the upcoming Renters’ Reform Bill that will abolish section 21 ‘no-fault’ evictions and prompt landlords to sell up.
Tarrant Parsons, RICS’ senior economist, said: “The latest survey feedback indicates a modest recovery in the sales market activity during May, with generally less negativity compared to the end of 2022.
“However, it seems storm clouds are gathered, with the UK’s stubbornly high inflation likely undermining the recent improvement in activity by prompting the Bank of England to take further action through interest rate rises, leading to higher mortgage rates and ultimately reducing affordability and buyer demand.
“The banking sector appears to expect this with many banks and building societies already introducing products with higher interest rates.”
He added: “Interest rate rises are also impacting the rental sector and combined with looming reforms proposed in the government’s Renters’ Reform Bill, landlords are increasingly deciding to leave the sector and sell up property, causing further constraints to lettings supply.”
Sarah Coles, the head of personal finance at Hargreaves Lansdown, said: “May was the calm before the storm, and even that was pretty dreary – with demand, house prices and sales falling.
“Mortgage rate hikes in the past two weeks will pile on more misery for the property market in the months to come, depressing demand and stifling sales.
“But it’s not just sellers who face a wretched summer, rising rates will also bring more grief for renters too.”
She added: “Higher mortgage rates are hitting the beleaguered rental market.
“Landlords have been selling after concluding new legislation was too expensive to comply with, and they’ve now been joined by a swathe of buy-to-let lenders, who realise that, once they remortgage, higher rates mean the maths no longer adds up. Two thirds of agents say more buy-to-let landlords are trying to sell.”
RICS highlights that there are regional variations in house price trends with London, for instance, showing a steady market, while owners in Scotland and Northern Ireland have seen house prices rise.
However, prices continue to fall in most English regions, with prices in the East Midlands and the South East heading ‘deep into negative territory’.
May’s residential market survey also highlights growth in new buyer enquiries and agreed sales.
But the potential for more interest rate hikes could dampen this positive trajectory, RICS says.
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DAMIEN RAFFERTY
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Sign Up8:53 AM, 8th June 2023, About A year ago
After reading the article about the " Renters reform coalition " and the various demands from groups who don't provide One bed to anyone who is homeless or searching for a place to live the number of Landlords selling up is only going to increase.
Well done to all the groups, councils and government departments involved and a special thank you to the Bank of England for hiking interest rates every month for the last 18 months with more to follow.
Private renting is being decimated
Beaver
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Sign Up9:38 AM, 8th June 2023, About A year ago
Reply to the comment left by DAMIEN RAFFERTY at 08/06/2023 - 08:53
All of this was predictable and it was predicted. Rent controls won't fix it.
Bristol Landlord
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Sign Up16:46 PM, 8th June 2023, About A year ago
Reply to the comment left by Beaver at 08/06/2023 - 09:38
Rent controls not only won’t fix it but will make it much worse.