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Landlord licensing mooted, homes at reduced prices, mortgage applications fall and other UK property news

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UK property news headlines reflect the prevailing economic headwinds that are buffeting the housing market – resulting not only in fewer mortgage applications but also a fall in those that are approved by lenders.

Another local authority looks to expand its landlord licensing scheme for property in the private rented sector while other news stories consider how improved home insulation might help to cut your energy bills.

Let’s take a closer look behind some of those headlines.

Another landlord licensing regime set for 2023

Warwick District Council is the latest local authority to consider extending the requirement for more of its shared housing stock in the private rented sector to be licensed, reported Landlord Today on the 30th of November.

While all large Houses in Multiple Occupation (HMOs) – housing five or more tenants – are legally required to be licensed, local authorities have discretionary powers to extend the need for licensing where it sees fit.

The housing authorities in Warwick will decide whether its licensing scheme should now also include houses shared by three or four separate tenants, bedsit accommodation, and converted flats. These are all currently free of any licensing restrictions and number around 700 properties.

Extending the licensing regime is intended to ensure that let properties such as these also meet standards on room sizes, are safe, well maintained, and free from serious health hazards.

A quarter of homes for sale see asking prices reduced

Signs of a more straitened housing market are revealed in the latest posting by the online listings website Zoopla on the 28th of November about the asking prices of homes currently for sale.

According to the website’s research, demand from buyers since the mini-budget of the 23rd of September has almost halved – a drop of 44% – and sales are currently lagging 28% of their volume at this time last year.

Although house prices continue to climb, they are doing so at their slowest rate (7.8%) since November of last year.

In response, says Zoopla, one in ten sellers have reduced the asking price of their home by at least 5%. The worst affected areas are the Southeast and East of England, where almost one in three sellers have reduced their asking prices in a bid to attract buyers.

The total number of residential housing transactions looks likely to fall to 1 million (from this year’s 1.3 million) in 2023.

Mortgage borrowing plunged by £2 billion in October as Britons delayed moving home because of high mortgage rates

Faltering demand in the housing market was also a story picked up by the financial pages of the Daily Mail on the 29th of November.

Inflation and the pressing challenges of the rising cost of living have instilled a growing caution amongst those who would otherwise have applied for mortgages to buy property. Instead, they appear to have been biding their time, and choosing to place any spare funds into fixed-term savings accounts.

The result has been a significant drop in individuals’ mortgage borrowing. Whereas the total funds borrowed were around £5.9 billion in September, the following month that amount had fallen to £4 billion.

UK mortgage approvals drop more than expected as borrowing costs rise

A similar story also unfolded in the Financial Times on the 29th of November.

Not only are potential buyers holding back from applying for mortgages, but lenders have also cut the number of mortgage approvals – from 66,000 in September to just 59,000 in October – the lowest approval rate since the beginning of the Covid pandemic in 2020.

At the same time, the cost of borrowing has also soared to its highest in eight years. The effective rate of interest on the average new mortgage has increased by 25 base points to reach 3.9% in October – the highest it has been since 2014.

The Financial Times also predicted a continued escalation of interest rates which are likely to climb to 6% by the beginning of 2023. With the cost of borrowing at these levels and borrowers struggling to manage on tightened incomes, mortgage approvals are likely to fall further. This, in turn, could result in a significant fall in house prices – by as much as 8% - in the year ahead.

Home insulation: How can it cut energy bills?

The government is funding an initiative to encourage more poorly insulated and energy-inefficient homes to be better insulated, explained the BBC on the 28th of November.

Households in lower council tax bands and properties with an energy performance certificate (EPC) of D or below will be eligible to apply for grants of up to £1,500 for improved insulation (through the installation of loft or cavity wall insulation, for example), under a scheme that currently goes by the somewhat ungainly title of Energy Company Obligation + (ECO+).

The BBC report explains that poorer households and those in fuel poverty will be helped by improved insulation that traps heat inside the home and prevents it from escaping through exposed surfaces such as walls, floors, and the roof.

With inadequate insulation, it is argued, homes can lose as much as 45% of their heat.