There is certainly renewed energy in the air as the property market emerges from several months of lockdown. The housing market is receiving the kind of enthusiastic attention stoked by several months’ of pent-up demand from the government, investors, builders and buyers.
Let’s take a brief look at some of the snippets of news arising from all this activity.
“Build, build, build” says PM
An article on the 1st of July, Landlord Today examines Boris Johnson’s pledge to spend billions of pounds and “build, build, build” in an attempt to kick-start economic recovery and get the government’s housebuilding programme back on track.
The article reminds readers that the present government’s long-standing target is for the building of an extra 300,000 homes every year by the mid-2020s. Despite the large majority secured during the last election and because of the setbacks caused by several months’ of lockdown, this target remains distant and the chronic housing shortage continues.
Despite the PM’s promise to “build, build, build”, say some market analysts, the emphasis seems to be on infrastructure projects rather than the affordable housing that is required.
BTL investors expanding their portfolios
Landlords are looking to take advantage of the opportunities developing in the private rented sector to expand their property portfolios – and are more than prepared to arrange buy to let remortgages for the necessary funds, claims Letting Agent Today last week.
There is some evidence that landlords may be less risk-averse as they spot opportunities to buy up cheaper properties in a market where prices are expected to drop before the end of this year. As a result, they seem better prepared to take the risk not only of remortgaging, but also looking to take on bigger loans to fund their property acquisitions.
Nevertheless, landlords are as concerned as ever to manage their cashflows. Achieving lower monthly outgoings is the second most critical objective of most landlords, says the article – last year it was only the third most important concern.
L&G commit to operational net-zero carbon on all new homes
On the 30th of June, housebuilders Legal & General (L&G) announced ambitious targets to make all the homes it builds or in which it invests net-zero carbon within 10 years (by 2030).
The group aims to achieve net-zero carbon standards in all the housing projects in which it is involved – Build to Sell, Build to Rent, affordable housing, and later living.
It expects to achieve those targets by combining thermal-efficient building fabrics with the use of environmental control systems in the homes, including low and zero-carbon technologies.
New-build market bouncing back quicker than second-hand market
Largely thanks to the release of pent-up demand amongst younger, first-time buyers, new-build homes are enjoying resurgent interest. The results are seen in a new-build market that is bouncing back quicker than the second-hand or resale market, according to a recent story in Estate Agent Today.
The recent lockdown, of course, depressed all activity across the housing market. During the week to the 5th of April, for example, the demand for new homes slumped by 53% but the demand for second-hand homes fared still worse, falling by 71%.
In the six weeks since the reopening of the housing market, the demand for new-build homes has bounced back by some 66%, says the report, compared with a recovery of just 46% in resale homes.
More financial support packages are also available to first-time buyers of new homes and these are helping to compensate for the generally lower loan to value (LTV) ratios offered by many mortgage lenders in the current climate.
Rents in central London drop 10%
Lettings agents Chestertons says landlords in central London have been forced to reduce rents by an average of 10%.
They report a number of factors have led to a reduced demand and therefore a drop in rental values. These include a sharp decline in the amount of corporate relocations, fewer overseas students looking for accommodation, and tenants moving back home with family over job security concerns.
A spokesman comments: “[Many landlords] are willing to reduce their rents in order to secure good tenants with which they can ride-out the rest of the pandemic. As a result, we are experiencing a very busy start to the summer market, although unusually for this time of year, rents are down by an average of 10% and continuing to fall slightly.”
Data from Chestertons also reveals that the number of new tenants registering to look for a new property was up 43% compared to May; property viewings were up 36%, offers were up 52% while tenancies were up 59%.