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Holiday let investment hassles, house price forecast, house “stolen”, and other UK property news

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UK property news remains as lively and informed as ever, with recent headlines shining a light on the experiences of would-be investors in holiday lets, forecasts of the movement in house prices, reactions from the housing sector to the autumn budget, and predictions about an imminent rise in mortgage interest rates.

Let’s take a closer look.

The top five reasons potential holiday-let investors won’t invest

For all the attractions, many would-be investors in holiday-let property are put off the whole idea because of the hassle involved, according to Property Reporter last week.

Although there are tax breaks available for the landlords of furnished holiday lets, the majority of potential investors seem to be unaware of any such incentive. Even those that do, are discouraged from going ahead with any investment because of the hassle involved. As many as 84% remained unconvinced of the financial opportunities – instead, citing:

  • their poor financial situation;
  • not wanting to be tied down to a single holiday destination;
  • holiday-let investment is better suited to younger people;
  • short-term tenants are likely to break things; and
  • the financial risk of empty, unlet periods is too great.

Because of these misplaced worries, many potential investors are missing out on the benefits of owning holiday-let property suggests the article.

Budget forecast: House prices will rise by 13% over next five years

2021 has been a truly bumper year for house prices, and they are tipped to continue to rise for at least the next five years, reported the Mail Online on the 27th of October.

Citing the latest figures from the Office for Budget Responsibility (OBR), the Mail disclosed that house prices are forecast to have risen by 8.6% by this year’s end – somewhat higher than initially predicted.

Following a possible dip next year, the same figures estimate that prices will continue to grow year on year until the conclusion of the current forecast period in 2026.

The leap in prices this year, followed by five more years of growth, will push the value of the average British home “far beyond” normal expectations, said the OBR.

Man is left shocked as his house is ‘stolen’

In a report on the earlier this week, the BBC reported the bizarre story of a house that has been sold and bought by new owners without the original owner being at all aware of the transaction. As far as the latter is concerned, his house was stolen from him.

While the original owner was away on a visit to North Wales, it seems that criminals had impersonated his credentials, stolen his identity, and sold the house in Luton from under him – transferring the proceeds to their own bank account.

The apparent fraud seems to have been completed without the knowledge of the new owners who are, even now, remodelling and redecorating the property while the police consider a criminal investigation, and the original owner weighs the possibility of civil action.

NRLA says budget benefit changes welcome but not enough

In a press release of the 28th of October, the National Residential Landlords Association (NRLA)  gave a cautious welcome to the government’s budget decision to taper the forthcoming reduction in Universal Credit.

It is no more than a cautious welcome because the NRLA believes the government could do still more to link housing costs for low-income earners to actual changes in market rents.

The NRLA also voiced its support for other decisions in the budget to:

  • bring forward the implementation of exemptions to the Shared Accommodation Rate for victims of domestic abuse and modern slavery;
  • the doubling (from 30 to 60 days) of the period within which Capital Gains Tax must be reported and paid on the sale of residential property in the UK; and
  • an extension of the period in which sole traders and landlords may prepare for and adjust to the Making Tax Digital (MTD) scheme.

Slow rise from ultra-low mortgage rates predicted

Amid signs that the Bank of England may be preparing to raise interest rates, the BBC reported on the 29th of October that some mortgage lenders have already increased their rates slightly.

With general inflation tipped to rise by as much as 4% next year, the Bank’s response is to raise interest rates from their currently historic low of 0.1%.

Any increase in the base lending rate is expected to be “slow and measured”, say analysts, with the biggest mortgage rate increases not filtering through until 2023. Even then, commentators do not expect the Bank’s base rate to rise much higher than 1% - unless inflation starts running above 5% when the base rate might rise by as much as 3.5%.