Latest Property News | Warwick Estate Agents

Details: Published: 28 November 2024; Hits: 411

New research has revealed the best type of housing in London for property investors, as rental demand in the capital remains strong and interest rates are set to fall in 2025.

Drawing on the latest house price and private rental data from August 2024, specialists at SBA Property Management have identified terraced houses as the highest-yielding type of housing for buy-to-let returns in the capital city.

With average property prices of £579,743 and monthly rental costs of £2,594, terraced houses in London offer buy-to-let investors yields of 5.37% – well above the average for all property types at 4.81%.

The second most lucrative property type to invest in is flats which offer an above-average rental yield of 5.08%. The average price of a flat in London is £443,073, with monthly rent payments of £1,876.

Semi-detached houses also present a good opportunity for investors, with average house prices of £686,952 and monthly rents of £2,695, yielding returns of 4.71%.

Detached houses offer the lowest rental yield for buy-to-let investors of 3.11%, with average house prices surpassing the million mark at £1,036,179.

Property investors remain in a strong position to buy, as the stage is set for mortgage costs to fall over the next year as interest rates decrease. In fact, interest rates are expected to fall as low as 2.75% by autumn 2025, according to economists at Goldman Sachs, making buying more affordable.

Paired with the predicted growth of the rental market as demand in the capital continues to skyrocket, now is a good time to make a purchase.

Experts predict a moderate annual increase in London rental prices between 3% and 5% in 2025, above the UK-wide market average which is 2% to 4%.

Tim Darwall-Smith, director at SBA Property Management, saus: “As mortgage costs fall and demand for rented accommodation continues to increase, now is the perfect time for investors to look at the London property market.

“Our analysis of the latest data shows that terraced housing is the best investment opportunity in London, yielding high rental return rates of 5.37%. Investors must pay attention to which property types and locations will make them the best returns – as interest rates continue to decrease, new opportunities will present themselves.”

Going beyond the latest data, terraced houses and flats have proven to be the most reliable investment opportunity over the last five years, with their average rental yields from the period August 2019-July 2024 sitting at 4.88% and 4.47% respectively. This is closely followed by semi-detached properties, which yield an average return of 4.32% – just above the five-year average for all properties at 4.3%.

When comparing London with the rest of the country, rental yields are unsurprisingly lower in London due to high property prices, but the pattern of how well different property types perform in terms of rental yield remains the same.

Across England, terraced housing was the highest-yielding property type at 5.80%, closely followed by flats at 5.58%.

Details: Published: 22 November 2024; Hits: 406

Long-awaited reforms to the leasehold system in England and Wales have been delayed for several months owing to “flaws” in legislation passed by the previous Conservative government, the housing minister has said.

Matthew Pennycook told the Commons yesterday it would take longer than expected to introduce reforms originally passed by the former housing secretary Michael Gove in the dying days of the last parliament.

Pennycock told the press that he remained committed to ending what he called the “feudal” leasehold system, which means homeowners have little say over the charges they pay or the way their buildings are managed. He promised to abolish the system before the next election.

Pennycook said: “We are determined to act as quickly as possible to protect leaseholders suffering from unfair practices, but we’re equally determined to take the time necessary to ensure our reforms are watertight and to the lasting benefit of leaseholders.

“We committed in our manifesto to finally bringing the feudal leasehold system to an end and that is precisely what the government is determined to do over the course of this parliament.”

Gove had long promised to end the system altogether, but ended up passing a more limited package of reforms, which included a ban on selling new houses under leasehold and making it easier for tenants to manage their own buildings.

Many of the measures in the Leasehold and Freehold Reform Act 2024 needed secondary legislation to be enacted, which Labour promised to pass quickly, but which Pennycook said had proved more difficult than expected.

The delayed measures include calculating how much tenants should pay to purchase their leases, which officials say was undermined by a loophole in the original law that would have left the government open to legal action.

Another problem is that many building managers do not themselves own the freehold and so would be unable to comply with the original act.

A third flaw in the previous bill, Pennycook said, lay in provisions to enable more tenants to vote for the right to manage their own properties. The way the bill was written, he said, would have led some building owners themselves to vote in any ballot, potentially cancelling out the votes of the inhabitants themselves.

“The very fact that crucial measures, including the new process for determining premiums, cannot be brought into force until we’ve legislated to fix a number of serious flaws in the last government’s act should serve as a warning about the risks of rushing these vital reforms,” he said.

The delay to the Gove reforms was welcomed by freeholders.

Natalie Chambers, the director of the Residential Freehold Association, said: “We welcome the government’s recognition of the complexities around implementing leasehold reform, as well as the serious flaws in the legislative approach taken by the previous government.”

Some leaseholders also welcomed the clarity provided by Pennycook’s announcement. Sebastian O’Kelly, director of the Leasehold Knowledge Partnership, commented: “Pennycook is a cautious, detail-driven minister, but five million people are now living in homes with a flawed tenure the government wants to ban.”

Others, quite understandably, expressed frustration at yet another delay.

Harry Scoffin, the founder of the campaign group Free Leaseholders, added: “This isn’t the insurgent government-of-delivery we were promised. Instead, we face burial under yet more consultations. Leaseholders will remain financial captives for years to come. Deep-pocketed vested interests benefit from these delays.”

Propertymark has highlighted the following future consultations.

Each consultation targets specific areas of concern and requires secondary legislation to ensure greater transparency and fairness.

+ January 2025 will see the commencement of the removal of the two-year restriction on enfranchisement and lease extension claims from the point of property purchase so that leaseholders will no longer have to wait.

+ In Spring 2025, the UK government commence the provisions on the Right to Manage which increase access to the right for leaseholders in mixed-use buildings, alongside reforming costs and voting rights.

+ No date has been set for the consultations on the details of the Act’s ban on building insurance remuneration.

+ Summer 2025 will see the consultation on the valuation rates used to calculate the cost of enfranchisement premiums.

+ 2025 is the only timeframe stated for a consultation on implementing the Leasehold and Freehold Reform Act’s new consumer protection provisions for homeowners on freehold estates, and on service charges and legal costs. However, these measures will be brought into force as quickly as possible after the consultation process, which is one thing the UK Government has, committed to.

+ Options to reduce the prevalence of private estate management arrangements to end the injustice of ‘fleecehold’ will also see a consultation released in 2025 with no specific date set.

Details: Published: 20 November 2024; Hits: 400

UK rents are set to grow by a further 17.6% over the next five years, according to property firm Savills, as the imbalance between high demand and low supply is set to continue. And the agency warns that with more landlords quitting, that figure could rise further.

But, there are signs in some markets, particularly London, that affordability constraints will press the brakes on growth.

While tenant demand has come down from its record highs of 2021 and 2022, it remains at elevated levels. At the same time, the latest listings data indicates that the number of available rental listings per active letting branch was 16% below their 2018-19 level in September.

As a result, properties are letting 20% faster in 2024 to date than during 2018/19, and there is further upward pressure on prices.

“High demand and low supply have been the influence behind the significant rental growth seen over the past few years. At a national level, this pattern looks set to continue with rents expected to rise above incomes again” comments Guy Whittaker, research analyst at Savills.

“It is challenging to see where an increase in rental supply will come from in the next couple of years. The increase to the existing Stamp Duty Land Tax surcharge for second homes will likely dampen demand from new buy-to-let investors, and it will prevent some existing landlords from expanding their portfolios.

“The potential requirement to upgrade EPC ratings by 2030 may see some leave the sector altogether, particularly in markets where the upgrades required would exceed an entire year’s rental income. In those cases, it may make more financial sense to sell.”

Strong rental growth has stretched the finances of those living in the rental sector, limiting the capacity for further increases in some markets, says Savills.

Rental prices grew by 4% nationally in the 12 months to September 2024, less than half the previous year. While London rents grew by just 1.5%.

Nationally, Savills expects the imbalance of demand over supply will continue to override affordability in the short term, pushing up rents. Looking further ahead, Savills expects rental growth to be more aligned with income towards the end of the five-year period.

But in London, the market is already experiencing the drag effect of affordability. With Londoners spending as much as 43% of their income in 2023, an inflection point appears to of been reached.

“Slower rental growth through 2023 has led to a slight easing of affordability pressures in London. We expect that this trend will continue in the near term with rental growth of 2.5% in London in 2025, against income growth of 2.9%,” continues Whittaker.

“However, we expect to see more landlords exit the market, further eroding supply, and affordability will once again take a backseat. This would mean that rental growth could be stronger than we have currently forecast.”

	2024	2025	2026	2027	2028	2029	2025-29
UK rental growth	4.0%	4.0%	3.5%	3.0%	3.0%	3.0%	17.6%
London rental growth	1.5%	2.5%	2.5%	2.5%	3.0%	3.0%	14.2%
UK Income growth	2.9%	+2.9%	+2.6%	+2.5%	+3.1%	+3.0%	15.0%

Details: Published: 12 November 2024; Hits: 311

The Bank of England’s recent rate cut is a welcome move and one that was needed given the economic performance this year. With inflation now below the 2% target and a new government working to build positive momentum heading into 2025, things are looking up.

Property investors are likely to be encouraged by the rate drop, and we’re already seeing renewed interest post-election. This is expected to keep growing, especially with the stability the new government brings for the next 4-5 years—there’s a lot of confidence in the market right now.

That said, we probably won’t see any huge financial shifts. Lenders have already factored in the expected rate drops, but this move from the Bank of England signals their readiness to start lowering rates. We can likely expect further cuts in early 2025.

Still, this rate cut might be a bit of a double-edged sword for property investors.

On one hand, lower interest rates make borrowing cheaper, which should help buyers and those refinancing. Even a small dip in mortgage rates could open up opportunities for investors who’ve been sitting on the sidelines. On the other hand, there might be a slowdown in rate cuts from here, as inflation is still a concern. The Bank has made it clear that it will be watching inflation closely, especially with the extra fiscal stimulus from the recent Budget. This means we might not see the big drops in rates that many investors are hoping for.

However, let’s not forget that the Bank of England’s rate cuts don’t instantly translate to cheaper mortgages, especially for those on fixed rates. People who locked in rates a couple of years ago when they were higher might not see any relief just yet. That said, tracker mortgages and people looking to secure new loans could benefit from this. The property market may also start to see more activity as people adjust to the slightly lower rates, which could stabilise property prices in some regions.

I think it’s also crucial to point out that despite the rate cut, the mortgage market isn’t operating in a vacuum. Lenders are still being cautious, and the volatility we’ve seen in the wake of the mini-budget last year has made banks more selective. Yes, there might be some immediate relief for tracker mortgage holders, but for anyone hoping for drastic changes to fixed-rate deals, it’s going to take time. If the government continues to boost public spending, as we saw with the recent budget, this could ultimately keep inflation slightly elevated, which might mean that rates stay sticky longer than expected.

As we’ve seen, when inflation rises even slightly, it can have an outsized impact on construction costs. For developers, it’s about more than just interest rates. Higher costs for materials and labour, driven by inflation, could mean more expensive new builds and less margin for error. Lower rates might stimulate demand, but if costs keep rising, those price increases could get passed down to buyers, potentially hurting affordability. It’s something we’ll have to keep an eye on.

With all that in mind, property investors should stay cautious but optimistic. The key is to remain flexible. If you’re in a position to buy, look for opportunities in areas where demand remains strong despite potential inflationary pressures. There may be more opportunities in smaller markets where price growth isn’t as volatile. For those holding onto properties, it’s also worth considering refinancing, if you’re coming to the end of a fixed-rate term.

I’d also add that we need to consider the long-term trajectory.

This rate cut isn’t likely to be the end of the story. While the Bank has signalled gradual future cuts, it’s clear they’re mindful of inflation. As such, property investors need to plan for a market where rates are not going to fall dramatically anytime soon. That means thinking strategically about both debt and asset allocation. Diversifying portfolios could be key.