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2022 Outlook for UK Property Market

The last few years have been far from predictable for the UK property market. With the impact of the COVID-19 pandemic, many experts were initially anticipating a property market crash but the property industry has thrived with property prices increasing steadily. The average house price increased by almost £34,000 since the start of the pandemic and now stands at a record £276,091 as of December 2021 (source: Halifax).

Initiatives such as the stamp duty tax holiday and the 5% deposit mortgage scheme have helped to keep the property market buoyant. However, the outlook for 2022 could be heavily affected by rising inflation and many experts are expecting a slowdown in house price increases. The end of the stamp duty holiday is predicted to have a significant impact on the numbers of sales in 2022 compared to 2021.

The Bank of England raised interest rates in December 2021 for the first time since the pandemic began, and further increases are likely to follow in the coming months; which will mean that the record low mortgage deals of 2021 will no longer be available and homeowners are therefore urged to remortgage sooner rather than later to fix on low rates.

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The ongoing impact of COVID-19 on the UK Property Market

Much like the COVID-19 pandemic, it is very difficult to predict what will happen in 2022. If new variants continue to appear then the property market will be affected by this. The uncertainty has resulted in some very mixed predictions from experts in the property industry.

Rightmove has forecast a 5% price increase in 2022, while Zoopla predicts 3% and Oxford Economics are warning of a 1.4% fall in prices.

Another consequence of COVID-19 is that it has influenced a change of trend in the desired property types and locations of where people are looking to buy property. After the first lockdown, there was a huge influx of searches for properties outside of cities, offering more space and local areas of beauty to enjoy.

There is still a high demand for these types of properties and there has also been a noticeable uplift in buying properties in the Northwest of England. The demand for homes is currently bigger than the number of available properties, so this may keep pushing property prices up in this part of the UK.

Seasonal changes to the Property Market

The seasonal pattern of the housing market is expected to continue as usual, with the typical lull in the lead up to Christmas and New Year followed by a surge of people looking to buy property in spring.

A survey conducted by Zoopla revealed that around a fifth of homeowners are eager to move house due to the pandemic, so it is unlikely that it will be a quiet year, but the general consensus is that it will not be as busy as 2021.

Outlook for First-time Buyers

First-time buyers have generally struggled in recent years due to rising house prices and the requirement to save up a large deposit. In 2022, the government’s 5% deposit scheme will help many first-time buyers to afford a property, but the increasing interest rates will price some people out of getting on the property market.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

2022 Outlook for Property Investors & Landlords

Many Buy to Let landlords have enjoyed the benefits of the huge price growth in the last 12 months, helping to raise the value of their portfolio or make quick profits by buying and selling a property a year later. In 2022, the predicted slowdown of price increases will mean that most Landlords & Property Investors and will not make as much equity in the property they buy over the next 12-month period.

In recent years, rents have been increasing and hit a 13-year high due to the high demand for rental properties and a low number of available properties. Until this imbalance is addressed, it is likely that high rents will continue.

For foreign & overseas Property Investors, the increase in tax may put some investors off, but the huge rental demand in the UK and relatively low interest rates for mortgages ensure that the UK is still one of the best places to invest when considering other options globally.

Another factor to consider for investors is the increasing requirement for UK holiday accommodation, with travel restrictions continuing and many people not wanting to risk booking a foreign holiday due to all the additional paperwork and costs this currently incurs.

People investing in holiday accommodation such as Lodges in the countryside or Apartments in coastal areas are able to charge large rents. Places like Cornwall, Wales, Scotland and the Lake District are in high demand with holidaymakers, so this type of investment should be highly profitable over the next few years.

Property Investors who can find properties in hotspots where prices are expected to continue rising or highly in demand holiday locations stand to do well, despite the predicted slowdown in price increases.

Get in Touch

If you are considering buying a new home, investing in a new UK property or even remortgaging your existing finance arrangements in 2022 to enable you to start saving money on your monthly mortgage costs, speak with us today for free and independent mortgage advice. Call us now on 03303 112 646. Alternatively, you can complete this short online form now to request a call back from one of our Team of highly experienced and CeMAP Qualified Mortgage Advisors who will gladly assist you with all your mortgage and commercial finance needs.

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Commercial Finance – Business Interruption Loans and COVID

How COVID-19 Has Impacted Commercial Finance

The COVID-19 pandemic has left a lasting impact on many aspects of life, from restrictions on social lives, to businesses going into administration. Even though the UK economy is now experiencing a period of positive growth, mainly due to the pace of the vaccination programme, the financial impact of the pandemic is still very visible.

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Shortly after the first lockdown restrictions came into place, lenders were quick to tighten their lending criteria, to try and protect themselves from the expected risk of higher unemployment levels and people struggling to pay off mortgages and loans.

Commercial finance was affected in a similar way, with so many businesses being forced to close during lockdown, the commercial finance landscape lurched into unknown territory.

Many businesses were provided with financial support in the form of furloughing, business interruption loans and bounce back loans but others were unable to apply for these. Some lenders offered holiday payments for commercial finance, so there were numerous financial support options in place to try and help struggling businesses survive the pandemic.


Commercial Mortgages UK Adverse Credit and BTL

As an independent UK Commercial Mortgage Broker we carefully examine all the Buy-to-Let mortgage offers from leading whole of market lenders across the UK. You will benefit from low interest rates, lenient eligibility criteria and a simplified procedure. You also have the choice of Second Charge Mortgages, Adverse Credit Mortgages for individuals with crediting challenges, to straightforward Residential Mortgages for your own home.

With the reassurance of attractive Mortgage Protection Insurancee options, we also offer specialist mortgage broker services such as self-employed Contractor Mortgages, Expat Mortgages, home loans and Sharia Mortgages, to commercial Serviced Accommodation Finance from holiday homes to Property Investors, Developers and existing Homeowners.

Business Loan Applications – UK’s Changing Priorities

The priority for the government was to assist existing businesses, rather than helping new businesses to launch, which was highlighted by the financial support options that were made available. Startup loans were still available from some lenders but it was now harder for many would-be entrepreneurs to access loans.

In the UK, many people use startup business loans to buy the equipment and pay for other essentials when they start up a business. With the economic downturn, many lenders have withdrawn products from the market and tighter lending criteria was applied.

However, the Bank of England cut interest rates down to 0.1% which meant that some of the new business loan interest rates have been more attractive for startup business owners, but there is a more comprehensive set of lending criteria to enable lenders to manage risk in the unstable climate.

COVID Government finance support schemes for businesses

To assist existing businesses who had been adversely affected by coronavirus, the government introduced the following schemes to support cashflow during this challenging period:

Interest-Free Business and Commercial Loans

Coronavirus Business Interruption Loan Scheme (CBILS)

SME businesses have been able to access business interruption loans for lost revenue and cashflow disruptions. The CBILS was also made available to businesses whose growth requirement could not be supported under standard bank lending criteria. Under the scheme, businesses who had been adversely affected by the pandemic could apply for loans of up to £5million.

The first 12 months of the loan is interest-free and the interest rates after a year for the CBILS scheme were set by the lenders. Some lenders provided the loans with an interest rate as low as 1.4%, while at the higher end of the scale, some lenders were offering the loans with a 8.9% interest rate. Terms were available for up to 10 years.

To encourage more lending, the government also guaranteed loan repayments, with the borrower being fully liable for the debt.

Lenders were able to provide the following finance under the CBILS scheme:

  • Term loans
  • Overdrafts
  • Invoice finance
  • Asset finance

Bounce Back Loan Scheme (BBLS) SME and Sole Trader Businesses

The Bounce Back Loan was aimed to support smaller businesses and sole traders, to provide them quick access to financial support. The scheme allowed businesses to borrow between £2,000 and up to 25% of their turnover (to a maximum of £50,000). For the first 12 months, there is no interest to pay and following that first year a rate of 2.5% would be applied.

The maximum loan length for the BBLS was six years and this scheme also came with a guarantee to the lender from the government for the repayment, with the borrower remaining liable for the debt.

Pay As You Grow (PAYG) Business Support

For businesses who took out the BBLS, the option for PAYG was later introduced to provide further support, allowing:

  • An extension of the loan term from six years up to 10 years, remaining at 2.5% interest rate.
  • Reduction of monthly payments by paying interest-only for six months. This could be requested up to three times throughout the term of the loan.
  • A repayment holiday of up to six months, which was only available once during the term.

Other financial support provided to businesses included:

Job Retention Scheme – Paid in the form of grants to pay 80% of the salaries of furloughed employees.

New Restart Grants – A one-off cash grant of up to £18,000 for businesses re-opening from April 2021, including pubs, hotels, restaurants, gyms, salons and clubs.

Business Rates Holidays – Business rates were cancelled for all retail, leisure and hospitality businesses for the tax year 2020-21 and up to June 2021, with a discounted rate for the remainder of the tax year.

Recovery Loan Scheme – This has replaced the BBLS and allows businesses to apply for between £25,000 and £10m. The government has given lenders an 80% guarantee for these loan repayments.

There have also been other schemes for different types of businesses, some made available through local authorities.

Commercial Finance Landscape Has Changed – Conclusion

COVID-19 has completely changed the landscape for commercial finance, particularly as the government has been compelled to step in to help save businesses from closure or building up unmanageable debts.

Lenders have been able to provide loans under the schemes with the security of knowing that the repayments are guaranteed by the government, which has helped them to continue providing finance to businesses when the risk to them is extremely high.

The success of the UK vaccination programme has already had a significant impact on economic recovery in the UK and the combination of this, along with the support that the government has provided will certainly have saved many businesses which otherwise would have gone into administration.

Experts are predicting that over the next few years should hopefully see a shift back towards the type of commercial finance products that were available pre-COVID, albeit with stricter lending criteria until we see a full economic recovery.

Commercial Finance Network is a specialist Commercial Finance Broker offering all types of commercial finance to SMEs along with individual investors. Get in touch today via either our Contact Form or call us on 03303 112 646.

Commercial Business Finance – The Rise of AI In The Banking and Lending Circles

June, 2017 archives: “Artificial intelligence can help people make faster, better, and cheaper decisions. But you have to be willing to collaborate with the machine, and not just treat it as either a servant or an overlord,” says Anand Rao, PwC Innovation Lead, Analytics.

The quote neatly sums up our relationship with AI technology. Although we appreciate its potential, we feel edgy about its power and possibilities. However, despite this, it’s pervading our lives as consumers, whether we like it or not. Every time we receive a marketing email or product recommendation, we can be sure the algorithms have been at work and we are far from the random target.

Despite its image of being cautious and conservative, the banking industry as a whole appears to have had few qualms about adopting the technology – and it seems that, as consumers, we are happy with this. A mammoth survey of around 33,000 consumers by Accenture found that more than 70 percent of us would be willing to receive computer-generated banking advice. “Automated servicing can be the sole source of data from some customers, even when making complex decisions around products,” says the report.

One of the main uses of AI so far has been in customer service. Chatbots are becoming the de facto alternative to banking apps. This use AI to simulate conversion through written or spoken text. Just as Amazon has humanised its digital assistant by calling it Alexa, so has the Nordic banking group Swedbank created ‘Nina’. This chatbot is clearly popular; within three months of being deployed, Nina was averaging around 30,000 conversations per month.

However, this is the sharp end of AI – the human/machine interface mainly used in the consumer-facing world of retail banks. But how does – or will – AI play out in a commercial finance environment?

The business sector is understandably more cautious, prudent perhaps, about adopting new technologies until they have matured. But as millennials take up more senior roles in the commercial banking world, they will be increasingly pushing for the rich functionality they know as consumers to also be integrated into their working environment.

Today, we are seeing signs that adoption rates of AI-based technology are set to take off in business banking too. More and more banks are borrowing retail banking experience to build out their commercial and business strategies. But while the focus of its use in the retail banking world has mainly been for customer service and sales applications, in commercial banking, use cases (initially at least) are likely to be more around streamlining operational processes.

In a sense, AI as it stands today, in this environment is all about automation, about making processes faster and more efficient. And there are a raft of applications here where automation is having a hugely positive impact.

Take the introduction of digital expenses platforms and integrated payments tools, both of which have the potential to significantly improve a business’s approach to how it manages cash flow. By having an immediate oversight, through live reporting of all spending from business cards and invoice payments, as well as balances and credit limits across departments and individuals, businesses can foresee potential problems more quickly and react accordingly. All these services become even more powerful when combined with technologies like machine learning, data analytics and task automation.

We are already seeing growing instances of AI and automation being used to streamline payment processes in banks. Cards can be cancelled or at least suspended quickly and easily and without the need to contact the issuing bank, while invoices can also be automated, to streamline business payments. This means businesses can effectively keep hold of money longer and at the same time pay creditors more quickly. Moving beyond straightforward invoice processing, intelligent payment systems can be deployed to maximise this use of company credit lines automatically.

Looking ahead, we see a string of applications for AI in the payments management field around analysing data with the end objective of spotting anomalies in it. With the short and frequent batches of payments data used within most enterprises today, it is unlikely that even the best-trained administrator would be able to spot transactions that were out of the normal pattern. The latest AI technology could be used here to tease out anomalies and pinpoint unusual patterns or trends in spending that could then be investigated and addressed.

While this area remains in its infancy within the banking and financial services sector, with technology advancing, financial services organisations and the enterprise customers they deal with will in the future will be well placed to make active use of AI that will help clients track not just what they have been spending historically but also to predict what they are likely to spend in the future. AI will ultimately enable businesses to move from reactive historical reporting to proactive anticipation of likely future trends.

Source: Russell Bennett, chief technology officer, Fraedom

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Average rents up for fifth consecutive quarter

Average UK rents increased for the fifth consecutive quarter during Q4 2021, according to data collected by The Deposit Protection Service (DPS).

Average rents reached £834 during the final three months of 2021, an increase of £16 (1.96%) on the previous quarter and a £42 or 5.30% increase on Q3 2020.

South West rents, which traditionally lag behind the national average, drew level for the first time, rising by £19 (2.33%) during Q4 2021, and by £54 (6.92%) from £780, the largest regional percentage increase during the past 12 months.

Average rents have increased across all property types since Q3 2021, with those on detached properties increasing the most; on average by £26 (2.33%) to £1,143, and also rising £88 or 8.34% from Q3 2020.

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The organisation also said that Q4 2021 rents also rose across most of England, with London, the South West, and Yorkshire seeing the largest value rises, contributing to an annual UK average rent increase of just over 4% for 2021.

York saw one of the highest increases, up £71 (9.49%) from £748 to £819 during Q4 2021, a rise of £120 or 17.17% from £699 since Q4 2020.

Conversely, Southampton saw one of the largest falls in rental value during Q4 2021, decreasing £122, (15.12%) from £807 to £685.

Average rents in the North East, traditionally one of the cheapest regions in the UK to rent, increased by £5 (0.91%) from £549 to £554 during Q4 2021, with rents increasing £34 (6.54%) during the past 12 months.

During Q4 2021 London rents increased for the second consecutive quarter, ending 2021 at £1,381, an increase of £42 (3.14%), the highest value regional increase, and a £64 (4.86%) increase on the same quarter during 2020.

The London borough of Islington saw the sharpest value rise in rent during Q4 2021, an increase of £273 (19.6%), from £1,393 to £1,666, added the organisation.

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Matt Trevett, managing director at The DPS, said: “During Q4 2021 rents increased in the vast majority of UK regions and across all property types, with demand for detached properties driving the greatest increase in rental value for these properties.

“Our figures also show that renters were less likely to move during the past 12 months, suggesting lower availability of stock and therefore perhaps more limited options for moving.

“We’re also seeing definitive signs of recovery in London, particularly the return of the popularity of flats in some areas, suggesting that some tenants are coming back to the capital.”

Paul Fryers added: ”There is currently significant pressure on rental stock across the country.

“Reasons are complex, but they include landlords selling up to capitalise on high sale prices, plus a shortage of new build homes as a result of supply chain and raw materials issues.

“We’re hearing stories of landlords receiving unprecedented levels of interest, with some renters willing to pay rents upfront and even stories of some tenants willing to pay over the odds to secure properties.”

By Jake Carter

Source: Mortgage Introducer

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Property industry reaction to Rightmove House Price Index

The average price of property coming to market added 0.3%, or £852, to hit an average of £341,019, which is 7.6% higher than in January 2021, the highest annual rate of price growth recorded by Rightmove since May 2016

First-time buyer asking prices reached a new record of £214,176 after a monthly jump of 1.4%.

Strong demand and continuing low numbers of available homes for sale set up the housing market frenzy to continue into the start of 2022, with early-bird sellers benefitting from increased buyer competition.

The number of buyers enquiring about homes is 15% higher than the same time last year.

The number of available homes for sale per estate agency branch dropped again to a new record low of just 12.

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Property industry reaction:

Guy Gittins, CEO of Chestertons, commented: “We expect the market to remain buoyant for at least the first quarter of 2022 as London is seeing the return of office workers, international students as well as Londoners who left the capital during the peak of the pandemic but are now seeking a return to the hustle and bustle of the city.”

“London’s property market cannot currently meet the demand from house hunters which, inevitably, has led to a very competitive market for buyers and rising prices. To secure their ideal property, buyers are advised to put themselves in the best possible position by having their finances and paperwork in place prior to starting their search as it will enable them to act fast.

North London estate agent, Jeremy Leaf, said: “Asking prices continue to rise, which is not surprising bearing in mind the lack of supply. Market appraisals are on the rise as well, but not fast enough to provide more of a balance between supply and demand.

“Rising asking prices are all very well but transaction numbers are more important and a more reliable snapshot of the health of the housing market. Lack of supply is holding back transactions, which is not good news for the property market or the wider economy.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

“It is of particular concern that first-time buyers are being asked to pay yet more to get a foot on the ladder. More realistic pricing is essential if first-time buyers are not going to be priced out of a purchase completely.”

Managing director of HBB Solutions, Chris Hodgkinson, commented: “There’s certainly been no New Year’s change where the UK property market is concerned and homebuyers are still swamping the market while house prices continue to defy the ‘what goes up must come down’ mantra.

In fact, with stock levels remaining low, this fresh wave of demand is pushing asking prices even higher than the stamp duty fuelled thresholds of last year.

When you also consider that the cost of borrowing is still very low, we can expect more of the same where property market performance is concerned in 2022.”

Director of Benham and Reeves, Marc von said: “There have been no signs of a sluggish start to the year for the property market and not only are we seeing a very strong level of buyer activity, but we’ve also been inundated with requests from potential sellers keen to make the most of these buoyant market conditions.

We’re now seeing a strong level of activity returning to the London market and the capital’s forecast is far brighter for the year ahead, having been uncharacteristically left in the shadows during the pandemic house price boom.

Overseas buyers are returning in their number and the capital is hotting up as the time to sell a home reduces and stock availability comes under pressure.

If buyers are quick there is still an element of ‘old stock’ that has been stuck on the market and these opportunities can potentially be snapped up at relatively decent price levels – for now.”

The founder and CEO of GetAgent.co.uk, Colby Short, remarked: “Many home sellers will have listed their home prior to the festive break in anticipation of a fast start to the year and this proactive approach is now paying off as many are already accepting offers on their homes.

However, for those buyers who are struggling to find their ideal home, there is hope for the year ahead. Now that the dust has settled following the final stamp duty holiday deadline, we’re seeing a significant increase in the number of sellers heading to market.

So we can expect to see a good level of fresh stock materialise over the coming months, bringing greater choice to buyers and adding yet further fuel to the house price growth furnace.”

Tomer Aboody, director of property lender MT Finance, said: “With such a lack of supply of good properties on the market, combined with plenty of cheap mortgages, buyers are pushing themselves to make sure they don’t miss out and asking prices continue to rise as sellers take advantage. If that means having to pay more for a home, then many buyers are prepared to do so.

“With inflation continuing to rise and higher mortgage rates likely at some point, this situation is unlikely to change in the short term if the supply situation does not improve. It remains to be seen what will happen as something approaching ’normality’ returns and things settle down.”

By MARC DA SILVA

Source: Property Industry Eye

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House prices spark in busiest start to the year

UK house prices continued to rise in January, marking the busiest start to the year on record, an industry survey showed on Monday.

According to the latest Rightmove House Price Index, the average price of property coming to market rose by 0.3% in January from December, to £341,019. That is 7.6% higher than January 2021, and the highest annual rate of price growth recorded by Rightmove since May 2016.

Rightmove said it was the busiest ever start to a new year, driven by ongoing strong demand and weak supply. Buyer enquiries surged by 15% year-on-year, while the number of available homes for sale per estate agency branch dropped to just 12.

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First-time buyer asking prices hit £214,174, a month-on-month jump of 1.4% and a fresh record. House prices are now 6.8% up on January 2021.

Tim Bannister, director of property data at Rightmove, said: “New Year sellers and buyers have been quick off the mark this year, with Rightmove recording the highest ever number of Boxing Day sellers coming to market.

“These early-bird sellers who got themselves ready to come to market are now benefiting from the busiest start to the year that we’ve recorded.

“All the signs suggest that prices are likely to continue to rise until more choice is available.

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“It is clear that the trends which defined the market in 2021 have carried over into this year.”

However, looking ahead, Bannister said there were “early signs” of a better balanced market in 2022. The number of requests from would-be sellers to agents increased in January, and was at one of the highest points ever on the first working day of the year.

“While this potential new supply will take a little while to appear on the market, it’s an encouraging sign of more choice for buyers in the coming months,” he noted.

The index is compiled from asking prices of properties coming to market via more than 13,000 estate agency branches that list on Rightmove.

By Abigail Townsend

Source: Sharecast News

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Record 47,400 Buy-to-Let Companies Set Up in 2021

Last year saw a record number of companies set up to hold buy-to-let property. In total there were 47,400 new buy-to-let companies incorporated in 2021 across the UK according to Companies House data.

This is nearly twice the number that were set up in 2017 when it was announced that investors with properties in their personal names would no longer be able to claim mortgage interest as an expense. While individual landlords are effectively taxed on turnover, company landlords are taxed on profit. This has meant that for some landlords – particularly those who are higher rate taxpayers – it has become more profitable to move their buy-to let(s) into a company.

However, the rate of growth in new incorporations fell compared to previous years, with a 14% increase recorded between 2020 and 2021, down from a 30% increase recorded between 2019 and 2020.

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While the number of buy-to-let companies up and running in the UK passed through the 200,000 mark as the country emerged from the first lockdown, by 2021 this figure rose to a new total of 269,300. 61% of these companies have been set up since the withdrawal of mortgage interest relief which began in April 2017.

The average buy-to-let company has been operating for 9.2 years, a figure which has fallen amid the rising number of new incorporations over the last five years. At the other end of the scale, 7,900 or 3% of companies have been running for more than 50 years, while 440 have been going for more than a century.

50% of new buy-to-let mortgages in 2021 were taken out by a company rather than someone buying in their personal name, meaning we estimate that around half of all new landlord purchases last year used a company to hold their buy-to-let. 40% of these new purchases went into a company which was less than a year old, suggesting newer landlords still account for a sizable proportion of growth.

Buy-to-let companies currently hold a total of 583,000 mortgaged properties, accounting for around 29% of all existing buy-to-let mortgages nationally. This figure has increased from 26% over the last 12 months.

The bulk of new buy-to-let companies set up in 2021 were in London and the South East, with the two regions together accounting for 45% of all new incorporations. These two regions have long led the incorporation charge given higher rents mean the tax advantages from incorporation are generally larger. Only the North East, the cheapest region in the country, saw fewer (-6%) buy-to-let companies set up in 2021 than in 2020.

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Northern Ireland (36%) has seen the biggest annual increase in the number of new buy-to-let companies set up, albeit from a low base.

While the number of buy-to-let incorporations has continued to grow, around 25,100 have closed their doors since the onset of the pandemic. 15,200 companies closed in 2021 which equates to around 6% of all buy-to-let companies up and running today. The average company closed down after 5.8 years, a figure which has fallen steadily in recent years as the number of incorporations has increased.

RENTAL GROWTH

Despite rental growth across Great Britain peaking over the summer months, an annual growth figure of 7.2% recorded in December 2021 means that rents were rising at around twice the rate recorded in December 2020. This compares to a peak of 8.7% in July 2021 and 7.9% in November 2021.

For the sixth month running, rents grew faster in the South West (12.8%) than in any other region. This growth means that average rents have now surpassed £1,000 per month in all four Southern regions of Great Britain: London before our records began in 2012, the South East in July 2016, East of England in December 2020 and the South West in December 2021.

Rental growth continued to strengthen in Greater London on the back of a recovery in Inner London. Inner London rents rose 8.6% over the last 12 months, the fastest rate since March 2016. This leaves the average rent here just 2.0% below where it was on the eve of the pandemic in January 2020.

Rental growth (3.7%) in Outer London has remained considerably more stable, returning to its pre-pandemic trajectory.

Source: Property Wire

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UK house prices hit another record high in December 2021

Average UK house prices rose 9.8% in 2021, resulting in a record high of £276,091 in December, according to the Halifax House Price Index.

House prices increased by over £24,500 in 2021, the largest annual cash rise since March 2003, but Halifax said this growth is likely to slow over the next year.

At 1.1%, the monthly rate of changed remained in line with November, but saw a slight drop from the 1.7% high seen month-on-month in September.

With only a slight dip of 0.6% in June, 2021 saw UK average house prices increase every month.

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Wales remained the strongest performing nation or region, with annual price inflation of 14.5%, taking the average house price to £205,579.

However, this was a slight decrease from the 14.8% rise recorded in Wales in November.

Northern Ireland was also one of the strongest performing regions, recording annual growth of 10.6%, and an average house price of £170,946.

House prices also continued to rise in Scotland, with the average property up 9.7% year-on-year, and the average price standing at £192,988 in December 2021, the most expensive on record.

In England, the North West was the strongest performing region (11.8%), followed by the South West (11.0%).

Despite registering a strong quarterly rise in prices (2.9%), up from 1.1% in November, London was still the weakest performing for annual inflation (2.1%).

Russell Galley, managing director at Halifax, said: “The housing market defied expectations in 2021, with quarterly growth reaching 3.5% in December, a level not seen since November 2006.

“In 2021 we saw the average house price reach new record highs on eight occasions, despite the UK being subject to ‘lockdown’ for much of the first six months of the year.

“The lack of spending opportunities afforded to people while restrictions were in place helped boost household cash reserves.

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“This factor, alongside the stamp duty holiday and the race for space as a result of home working, will have encouraged buyers to bring forward home purchases that may have been planned for this year.

“The extension of the government’s job and income support schemes also supported the labour market, and may have given some households the confidence to proceed with purchases.

“A lack of available homes for sale, and historically low mortgage rates, have also helped drive annual house price inflation to 9.8%, its highest level since July 2007.

“Looking ahead, the prospect that interest rates may rise further this year to tackle rising inflation, and increasing pressures on household budgets, suggests house price growth will slow considerably.

“Our expectation is that house prices will maintain their current strong levels but that growth relative to the last two years will be at a slower pace.

“However, there are many variables which could push house prices either way, depending on how the pandemic continues to impact the economic environment.”

Chris Hutchinson said: “A new year has begun with a similar story to the last, as house prices continue to rise.

“While there are still attractive low-deposit deals for first-time buyers, the increasing cost of living is causing ever more difficulty for potential homeowners to raise the funds necessary for a deposit and be in a strong position to pass the required affordability checks for a mortgage.

“Encouraging positive financial habits should be of paramount importance to the government and the housing industry from the moment people begin their renting journey.

“With competition in the market so high, having an edge will prove to be key for potential homeowners when looking to secure an affordable mortgage, therefore, building a strong credit score and financial resilience should be at the top of the list for all whose end goal is homeownership.”

Karen Noye added: “The 2021 property market was somewhat of a whirlwind, with prices consistently being pushed higher due to the stamp duty holiday, a race for space driven by home working and demand outweighing supply.

“While a continued rise in house prices in December is perhaps not what many will have been hoping for, we may finally see growth slow in 2022.

“With the Bank of England’s interest rate rise firmly in place, and with further increases hotly anticipated, we may finally see a slowdown in surging prices.

“Alongside the highly inflated housing market, mortgage rates have been pushed up and we will likely see further rises if the BoE increases rates again as expected.

“While there appear to be some positive signs in terms of the impact of the Omicron variant, it serves as a reminder of the uncertainty we still face in this pandemic.

“Increased mortgage costs and the threat of possible future restrictions may put homebuyers off, and we could see a break in house price growth as a result.

“However, as demand seemingly continues to outweigh supply, any fall in price growth is likely to be gradual.”

Gareth Lewis said: “Prices are still increasing but transactional flow has slowed a little, along with price growth.

“It will be interesting to see the housing market return to a level of normality over the next few months, without the government stimulation in the form of the stamp duty holiday which fuelled much of last year’s activity.

“Business has been buoyant as we start the year, with plenty of enquiries coming through.

“January can be quite a slow month as people gradually get back to work and find their feet but there are still motivated buyers who didn’t transact last year and are keen to do so, particularly before interest rates rise further.”

By Jessica Bird

Source: Mortgage Introducer

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House growth continues in the region

House prices rose by up to 12 per cent in 2021, although they’re anticipated to moderate to about three per cent in 2022, according to Michael Williams, a partner at Morris, Marshall and Poole with Norman Lloyd based at Aberystwyth.

“We’ve seen record sales throughout Powys, Ceredigion, Shropshire and Gwynedd over the past year amid a significant growth in house prices throughout the region,” he said. “We anticipate growth to moderate to around three per cent in 2022, even with the Bank of England base rate increase to 0.25 per cent in December.

“Demand from house buyers in the area has been outstripping the supply of housing stock. However, following Christmas and new year we’ve seen a stepped increase in homeowners wanting to put their properties on the market.

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“It’s been an encouraging start to the year. Many homebuyers are looking for larger properties, principally because they are spending greater time at home for work and leisure following the pandemic.”

He added: “Our advice to anyone thinking of selling their home is to seek a valuation from their estate agent and place it on the market. Prices have risen and demand is there. Combine that with anticipated inflation and base rate rises and now is the time to consider a house move, whether buying or selling.”

According to the Guild of Property Professionals, which Morris, Marshall and Poole with Norman Lloyd is a member of, an estimated 1.3 million residential property transactions will take place in the UK during 2022/2023 – eight per cent higher than the long-term average.

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This is set against a private housing stock turnover of around 3.5 per cent in Powys and Ceredigion in 2021 and four per cent to 4.49 per cent in Shropshire during the same period.

The average rate of price change in Powys was 12 per cent, with the average house price at £216,998 compared to Shropshire which saw a 16.9 per cent increase and an average house price of £255,156. This equates to an average house price increase of between £21,600 and £22,700.

Demand for homes in towns ranging from Newtown and Welshpool, to Aberystwyth and Machynlleth, Llanidloes and Rhayader, and Oswestry continues to rise.

“There’s unlikely to be any further changes to the Land Transaction Tax in Wales or Stamp Duty Tax in England. And so those who have held off selling their homes should consider their options now before any Base Rate rises,” added Mr Williams.

By James Pugh

Source: Shropshire Star

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Average property price estimates reveal an intriguing picture

In the world of surveying, common questions abound and are always being asked. ‘What is going to happen to UK house prices?’ tends to be the most common and the most general, and the answer is always, ‘We just don’t know’.

The future is not yet written and a valuation is always taken at a moment in time, and is always likely to be different at each moment.

However, what we do have as a business is a clear view on what has happened and a raft of data to give us an idea of the direction of travel that we have seen, and by viewing this, you’re likely to gain further info to form an opinion on where the market might be going next.

To that end, we recently collated average house price data for all the regions we have been active in over the last 14 months. From October 2020, for all English regions plus Scotland, Wales and Northern Ireland, we can track the average property value based on the estimate sent to us by the lender concerned when they instruct us.

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The product used is our standard mortgage valuation and all lenders/firms/surveyors are included in our data. That final point is worth emphasising – it is our data and is unique to us, but it by no means covers every single transaction that has taken place during that time and should therefore be treated in that context.

It may however outline where house prices have come from, where they most recently arrived at, when they might have peaked (if they have done), although again this does not mean we can suddenly predict what might happen in the future.

To start with, let’s look at the average estimated price for the UK as a whole – back in October 2020, according to our data, this was just over £305,000, however by December 2021 this had increased to just over £337,500, representing a 10.5% increase.

I suspect there are few shocks to be had in reading this. Most of the house price indices – and we are certainly not a sector short of these – will have reported along similar lines during the period, with average increases being in the region of 8-10% for the average UK property.

Of course, this is a notional property in and of itself, and the UK is incredibly regionalised in terms of what happens to prices. Our data, as mentioned, is broken down into 11 regions, and over the same time period (October 2020-December 2021) it may surprise you to learn that the region with the highest inflation is Greater London.

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It has gone from an average price of just shy of £590,000 to £718,000, representing close to a 22% increase. In much of the other house price data I have seen, certainly central London prices appear not to have increased by anywhere near the same levels as other regions; in fact it tends to be quite lower. However, this is a greater London region which might go some way to showing why it’s a heftier increase.

Conversely, it is the North East which currently sits bottom of our inflationary table, up only 0.8% over the period from just over £232,000 to £234,000.

Again, this appears to go against the grain slightly in terms of regions deemed to have seen bigger inflationary rises. From what I have seen, the larger increases appear to have been in regions such as Wales, the North, Scotland, etc.

Our data shows double-digit house price inflation in Wales (15.14%), the North West (12.84%), Scotland (11.39%), and Northern Ireland (10.96%), while the East Midlands (9.14%) and East of England (8.91%) are not too far behind either.

The rest of our regions are made up of the South East (7.16%), the South West (5.9%), and the West Midlands (2.05%).

Again, these figures might be surprising to some, but at the top end of the scale, they certainly seem to be in keeping with many other indices and the ‘mood music’ around what prices are doing.

Interestingly, during the time period, only one region – Scotland – had its peak average price in the last month covered, December 2021. All others had ‘peaked’ prior to that – one region in September 2021, seven in October 2021, and three others in November 2021.

That seems interesting in itself, given the stamp duty holiday finished in England at the end of September 2021 and yet prices continued to peak after that.

Admittedly, they have now come off that peak and may continue to do so. It’s therefore entirely plausible that house prices might plateau during the rest of the year, or merely inch up again following that slight drop-off.

What we can say is that the UK continues to suffer from a shortage of property supply, coupled with strengthening demand which looks unlikely to peter out. Lenders want to lend, many people want to move/buy, and they outstrip the current property numbers available.

This basic law of economics tends to see prices, at the very least, trending slightly upwards. It will be interesting to see if this is how the market does play out through the year ahead and we will certainly review the data we collect to track its progress.

By Simon Jackson

Source: Mortgage Introducer

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15% of landlords unaware of upcoming EPC changes

An estimated 15% of landlords said they have no knowledge of upcoming legislative changes to Energy Performance Certificates (EPCs), according to research from Shawbrook Bank.

From 2025, all newly rented properties will be required to have an EPC rating of C or above.

Currently, properties only require an EPC rating of E or above. Existing tenancies will have until 2028 to comply with the new rule changes.

A quarter (25%) of landlords surveyed said they had little to no knowledge of the forthcoming changes to the required EPC rating.

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With a large proportion (36%) of landlords with properties built pre-1940, Shawbrook’s analysis showed that a significant number of landlords will be required to make changes.

On a regional level, four in 10 landlords said that their properties in London were built prior to 1940, with a similar picture in the South West, Scotland and Wales.

Victorian properties make up 13% of private rental housing stock nationally, according to landlords.

Emma Cox, sales director at Shawbrook Bank, said: “The true extent of what this legislation could mean for the market has not yet been properly realised.

“Inaction could see a considerable percentage of the private rental sector declared unrentable or unsellable within a matter of years if landlords don’t take important steps now.

“Making changes to improve a property’s energy efficiency rating will help to improve the overall energy efficiency of the UK housing stock and to assist the government in meeting the ambitious net-carbon zero targets set out earlier this year.

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“But on a more direct level, making the improvements ahead of the impending 2025 deadline will ensure that properties remain commercially viable for the short and long term for landlords.

“Putting off making necessary changes could leave landlords exposed to extended void periods when their property can’t be rented out while works are being completed.

“Mortgage lenders, and key players in the market, have a big role to play in supporting landlords by helping them to understand the new legislation, the potential impact this could cause and how to take action, if required.

“Our research indicates a clear gap in landlord’s understanding of how the changes will impact them and their current yields.

“As well as these risks to landlords,, renters may also be put in an even worse position as they compete for a smaller number of properties that are rated C or above after the 2025 deadline.”

By Jake Carter

Source: Mortgage Introducer

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UK house prices accelerate at fastest pace since before financial crisis

UK house prices have accelerated at their fastest pace since before the financial crisis, shooting up over 10 per cent over the last year, reveal fresh figures released today.

The cost of buying a home in Britain hit £254,822 this month, the highest price on record and up around £24,000 since December last year, according to building society Nationwide.

House prices have taken off this year driven by a combination of a relief on taxes paid on property sales, prospective homeowners rushing to snap up larger homes with access to green space and a record low interest rate environment.

Chancellor Rishi Sunak raised the threshold at which stamp duty is paid on property sales to £500,000 in July last year.

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The tax break was watered down to £250,000 up until the end of September this year. It reverted to its normal £125,000 level at the end of the month.

However, demand in the property market has remained strong despite the relief being pulled.

Robert Gardner, Nationwide’s Chief Economist, said: “Demand has remained strong in recent months, despite the end of the stamp duty holiday at the end of September.”

“Mortgage approvals for house purchase have continued to run above pre-pandemic levels, despite the surge in activity seen earlier in the year,” he added.

The pandemic triggered mass take up of remote working practices, severing workers’ ties to physical offices, igniting strong demand for homes outside cities in the process.

Research published today by bank Halifax found that house prices in towns such as Taunton and Newark have risen more than treble the national average.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

However, Nationwide warned the property market is likely to cool in the coming year.

“It appears likely that the housing market will slow next year, since the stamp duty holiday encouraged many to bring forward their house purchase in order to avoid additional tax,” Gardener added.

“The Omicron variant could reinforce the slowdown if it leads to a weaker labour market.”

There are also concerns soaring home prices has choked affordability in the market, causing buyers to take on high levels of debt to fund purchases.

Habito, an online lender, is launching mortgages that are up to seven times a person’s salary, the first time the mortgage to salary multiple has reached this level since Northern Rock was nationalised in 2008.

Higher interest rates will likely deter prospective buyers with lower deposits from pushing ahead with home purchases.

The Bank of England this month hiked rates for the first time in over three years, lifting them 15 basis points from a record low 0.1 per cent.

By JACK BARNETT

Source: City AM

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