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Mortgages for landlords, the cost of living, average rents, and other UK property news

What are some of the challenges to domestic expenditure in the UK economy at the moment? And how does property news about the present state of the housing market reflect those trends?

Perhaps some of the latest headlines will reveal the answers – let’s take a brief look.

Are landlords facing a crisis? Buy-to-let (BTL) mortgage figures

Alarmed by an almost 124% increase in BTL mortgage arrears in the 12 months since the end of 2022, the Daily Mail recently reported that many landlords have reached a crisis point.

The newspaper points to clear evidence that Britain’s two million or so private sector landlords have been hit hard by rising mortgage interest rates. The impact is reflected in the staggering 55.4% fall in buy-to-let mortgage lending in the final quarter of 2023 compared with the last three months of 2022. During that period, interest rates on those loans went up by 5.7%, compared with an increase of 3.67% the previous year.

As landlords struggle with those rising interest rates, the volume of arrears – and, ultimately, repossessions – also starts to climb.

At the end of 2023, some 13,570 landlords were in arrears with their mortgage repayments. During the final quarter of 2023, 500 buy-to-let properties were repossessed by lenders – as a last resort after other options had failed to clear outstanding arrears. Those repossessions represent an increase of more than 56% on the repossessions made during the final quarter of 2022.

The difficulties have led to a general increase in rents and some landlords – especially those with only one or two let dwellings – have sold up and quit the market. Commentators suggest that bigger landlords, however, are seizing the opportunity to buy up potential investments – looking towards the longer term with a conviction that the private rental sector will deliver favourable returns.

Fresh hope for Brits as household bills fall and discretionary spend rises?

For the many households worried about recent increases in the cost of living, a report by Nationwide on the 23rd of April offers a glimmer of hope.

The building society found that its estimates of “essential costs” for families fell by 4% in March while the expenditure by households remained more or less the same. Those savings in essential costs, however, were perfectly balanced out by a 4% increase in “non-essential costs” – such as expenditure on holidays, eating out, or gardening.

More clement weather of late could account for some of this respective ebb and flow in savings and expenditure.

While glimmers of hope could be detected, the building society warned that mortgages, rents, and supermarket shopping costs remain high.

Average rent in the UK: April 2024

The latest report by the online listings website Zoopla on the 19th of April reveals that average rents across the UK as a whole have risen by 7.2% during the past 12 months – the equivalent of £960 per annum.

While average rents in the northeast of England are £695 a month and £2,121 in London, Scotland is where rent levels are rising at the fastest rate (despite the rent controls there).

The analysts at Zoopla predict that rent rises will slow down during the remainder of 2024 as the affordability for tenants restricts further growth in demand.

Housing market bounce pushes prices close to new record

Another online listings website Rightmove in a posting dated the 22nd of April revealed that the average advertised price of a home for sale in the UK now stands at £372,324 – an increase of 1.1% since March alone.

Although this is in line with the increase in prices typically recorded at this time of the year, Rightmove detects a bounce in the market. It has pushed average prices just £570 short of the all-time record high that was reached in May last year.

Unsurprisingly perhaps the market bounce is driven by the increase in asking prices for higher-value, large, detached homes with five bedrooms or more.

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