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Buy to let bubble ready to burst, rogue landlords, homebuyers wish lists, house price readjustments and UK house prices

an image of an estate agent wondering if the Buy to let bubble ready to burst
15 August 2022

By UKinsuranceNET In News

UK property news headlines raise the prospect of a bubble that could be ready to burst for the buy to let property market at a time when the financial penalties for rogue landlords are escalating substantially.

In the wider housing market, the press anticipates the possible wish lists of future homebuyers, reveals that hopeful sellers are adjusting asking prices downwards, and asks whether the market shows any signs of stalling.

Is Britain’s buy-to-let and second homes bubble about to burst?

The owners of buy to let investment properties and second homes are thinking that the market may have reached its peak – and are preparing to sell up before prices begin to decline.

A story in the Mail Online on the 5th of August suggested that the factors likely to burst the present bubble in the market for buy to let properties and second homes are:

  • the recent increase in interest rates – the Bank of England increased the base lending rate from the record low of 0.10% it set in March 2020 to 1.75% on the 4th of August; and


  • general, inflationary increases in running costs such as lettings agents’ fees, and maintenance.

In response to these pressures, the newspaper claims that up to 20% of all buy to let landlords are now thinking about selling part or the whole of their property portfolios while prices are still holding up. The newspaper notes the first month-by-month fall in property prices across the country as a whole.

Landlords fined millions in latest enforcement crackdown

Active enforcement measures are again trapping more rogue landlords who face fines totalling many millions of pounds for those who fall foul of the wide raft of buy to let legislation and regulations.

An article in Landlord Today on the 12th of August revealed that an estimated £8m in fines have already been imposed on landlords in London alone.

Local councils seem to be introducing more than more buy to let licensing schemes, so widening the net of regulations with which landlords need to comply – on pain of a hefty fine. 13 new schemes were introduced in the Greater London area, for example, during the past 12 months and 30 such schemes nationwide.

As active enforcement increases so too does the level of fines being imposed – nudging ever upward the combined financial penalties received by local authorities.

What will home-buyers of the future look for?

It seems almost certain that eco-friendly, sustainable, green features will top the wish lists for future homebuyers, asserts the online listings website Rightmove in a posting on the 3rd of August.

The so-called “green revolution” is part of the UK’s efforts to achieve “Net Zero” by 2050 and that target also involves aiming to make as many homes as possible eligible for a minimum C rating Energy Performance Certificate (EPC).

This naturally leads to homebuyers expressing their preference for environmentally and energy-efficient buildings. Along with all those traditional bonus points of a desirable location, a big garden, and faster than normal broadband connection, buyers of the future are just as likely to search out more energy-efficient homes and higher-rated EPCs.

Property sellers are dropping asking prices by £75,000 after ‘overpricing’ homes

The recent surge in house prices encouraged many homeowners to advertise houses they wanted to sell at unrealistic, overpriced levels.

A story in the Express newspaper on the 11th of August revealed that some 20% of asking prices have had to be dropped by as much as £75,000. The newspaper cites research suggesting that average prices of £380,637 have been overpriced and the revised selling price of £305,353 instead requested – a reduction of £75,284.

In moves that could also herald a cooling off or slowing down of growth in house prices, the biggest reductions in asking prices have been in London and the south east.

In the north east and the north west of the country, the asking prices of many homes have also been reduced by as much as 20%.

UK house prices set to fall? It’s not so simple

Although there may be some signs that the UK housing market is starting to flag, an article in Money Week on the 11th of August reminded readers that there are many factors determining prices levels – variations from one location to another, the type of residence, and regional differences (those between London and the rest of the country among the most notable).

Of all these distinct factors, though, Money Week argues that mortgage interest rates will create some of the biggest influences on the market – as interest rates rise, so the market may be expected to contract.

In the present economic climate of rapidly escalating energy prices, the green credentials and energy efficiency of a home will also be critical deciding factors while a return to international travel might also depress the attraction for buying holiday or second homes in the UK.

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