The rate of inflation and its associated escalation of the cost of living inevitably affects the housing market – for landlords and homeowners alike. This is reflected in recent property news headlines …
Buy to let mortgage curbs – more care demanded by Bank of England
Anticipating what it describes as a forthcoming “prolonged period of credit stress”, the Prudential Regulation Authority (PRA) of the Bank of England has urged lenders to exercise greater caution in advancing buy to let mortgage loans, according to a story in Landlord Today on the 12th of January.
The current collection of risk factors – such as higher interest rates, inflationary pressures, and cost of living increases – present new and previously untested stresses with the market for buy to let lending, says the Bank of England. Indeed, similar pressures are also affecting loans to small businesses, unsecured personal lending, and loans advanced for the purchase of commercial property.
Nationwide HPI – December 2022
The Nationwide Building Society has released details of the principal trends in its House Price Index (HPI) as the year drew to a close. In summary, these revealed:
- a fourth consecutive month in which average house prices fell – with a recorded decline in the annual rate of growth of 2.8% in the final month of the year;
- this decline has been echoed across all regions of the UK by the time the final quarter of the year came around;
- East Anglia returned the strongest market performance and house price growth during the year while Scotland recorded the weakest;
- the gap between the strongest and weakest performing regions was the smallest since the Nationwide started to compile an HPI; and
The figures reveal that average house prices in the UK have seen their biggest decline since the financial crisis of 2008, says the report. Prices at the end of the year were some 2.5% lower than the peak that had been achieved in August 2022.
Commentators ascribed at least some of this slump in prices to a temporary caution on the part of buyers in the initial phases of the current inflationary period. Renewed market activity might be expected as the New Year progresses.
The average UK household will lose over £2,000 in income this year
Citing research from the Resolution Foundation, Landlord Zone on the 10th of January revealed that the average family in the UK is likely to be worse off to the tune of at least £2,000 this year.
The UK is feeling the effects of some of the biggest impacts since the Second World War – the current war in Ukraine, the lingering effects of the Covid pandemic, high rates of government spending and borrowing, and the steadily increasing rate of inflation and the cost-of-living crisis that follows in its wake.
All these pressures are combining to strip an estimated £2,100 from the average family’s income in the year ahead, it says.
Government energy efficiency plans “dead in the water” warn landlords
In a press release on the 9th of January, the National Residential Landlords Association (NRLA) takes the government to task for its failure to provide landlords in the private rented sector with clear and transparent guidance with respect to its plans for energy efficiency.
Despite appeals by landlords for the government to delay the imposition of stricter energy efficiency standards until 2028 – instead of the 2025 target set by the government – there has been no clear response to the landlords’ demands.
Any hope that the government might achieve its aim of bringing all accommodation in the private rented sector to at least a ‘C’ Energy Performance Certificate rating is doomed to failure and likely to prove “dead in the water”, says the NRLA.
