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Buy-to-Let Watch: Grab 2024 with both hands

Last year’s mortgage market volatility was unprecedented, to say the least.

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We saw ongoing interest-rate rises, consecutive base-rate increases, and a huge (and often contentious) public discussion about what could be the most extensive legislation changes the sector had ever seen, by way of the Renters (Reform) Bill.

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Speaking with industry peers and my landlord clients, it’s fair to say we’re all happy to put 2023 behind us. And, what’s more, this upcoming year shows a much brighter outlook for the property market.

To read the full article click the link below:

Mortgage Strategy

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Rental Market Crisis As Demand Continues To Outweigh Supply

Letting agents have highlighted a persistent high demand for rental properties, coupled with a significant decline in available supply. This imbalance is primarily attributed to the dwindling number of new landlords entering the market, exacerbated by existing tenants choosing to stay put to circumvent the hike in rental prices.

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A recent survey conducted by the Royal Institution of Chartered Surveyors (RICS) among its members has unveiled a noticeable uptick in tenant demand throughout the three months leading to January. Despite this, there’s a sense of the market cooling off, possibly mitigating the ongoing reduction in new landlord listings.

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To view full article please click the link below.

Source: Landlord Knowledge

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A third of UK buy-to-let landlords plan to expand portfolios in 2024

Investors are spotting opportunities in the current market as more buy-to-let landlords make plans to snap up further properties in the year ahead.

Market sentiment in the buy-to-let sector has been impacted by a number of factors in recent years, from tax changes to the more recent issue of rising mortgage rates. House prices across much of the country have also slowed their pace of growth – which comes as no surprise after the rapid acceleration of 2020-2022.

However, as is often the case in the UK property market, investors continue to find the most promising assets, in terms of both location and property type, to keep activity strong in the sector. While 2023 was a year of uncertainty, investors are finding more to be positive about for 2024.

Inflation has fallen rapidly from its high point last year, despite the most recent announcement that revealed an small, unexpected rise. Interest rates have also been frozen for some time now, yet lenders have been reducing their rates and unveiling a wider array of products and incentives, including for buy-to-let landlords.

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Along with more positive house price news over the past couple of months, these factors have all combined to influence plans for landlords in the coming 12 months, and the latest research from Together Money has found that more than a third – 34% – of buy-to-let landlords will expand their portfolios this year.

More optimism for landlords

The survey by Together also found that 68% of landlords currently feel optimistic about their business outlook for 2024, despite 10% of respondents saying they they have “reservations”. A quarter of those surveyed also said they were planning to refinance their properties to “support business objectives” this year.

Since the start of 2024, some of the UK’s major banks and building societies have brought fresh, cheaper deals to the table since the start of 2024, including Co-operative Bank, First Direct, HSBC, NatWest, Halifax, Clydesdale Bank and Leeds Building Society, with a number of these lenders also offering buy-to-let mortgage deals.

There is now a growing number of sub-4% mortgage products available for landlords, which is a vast improvement on the peaks of almost 7% last summer. Borrowers are still urged to thoroughly check the details of each product though, as deals with the lowest rate aren’t always the best value for money for every customer.

Of course, some landlords with less borrowing power or those who are simply ready to cash in on their property assets are leaving the market at the moment, but this is also presenting opportunities for portfolio landlords to take on existing buy-to-let properties.

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Should you use a specialist lender?

The research from Together found that 42% of its landlord respondents said they would prioritise using a specialist lender rather than a mainstream one over the next 12 months (although this was specifically related to taking out additional financing for commercial property).

The reasons given were that specialist lenders are often prepared to take on greater risk and offer larger loans, while supporting entrepreneurial plans; an answer which was selected by 39% of respondents. 29% said they’d opt for a specialist lender because they are quicker, while 29% also said they provide the best service.

Where the purchase isn’t straightforward, such as when investing in a house in multiple occupation (HMO), or investing via a limited company, the vast majority of people will need to use a specialist lender. However, for a standard buy-to-let purchase, it is worth including mainstream lenders in your mortgage search.

According to MFS: “Specialist lenders deliver greater flexibility and speed than high street comparatives. Unlike high-street banks, they underwrite their loans manually. This allows them to approach each application on a case-by-case basis.”

The sector is reacclimatising

Chris Baguley, Group Channel Development Director at Together, said: “The short, sharp shock in interest rates since the Covid years triggered some cautiousness in the commercial market while investors were trying to predict where the peak would be. With rates settling, while there is still an overall flattening; activity is returning as the sector reacclimatises to the new environment.

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Buy-to-Let Landlords Target Long-Term Returns

Landlords Showing Faith in the UK Buy-to-Let Market

Landlords nationwide are optimistic about the buy-to-let market moving forward, according to Leaders Romans Group.

LRG conducted a nationwide landlord survey, trying to understand how landlords felt about the current market.

How Do Landlords Feel About the UK Rental Market?

According to the survey, 75% of landlords see the current supply and demand issue as an opportunity to make money in the private rented sector.

Demand is currently up by 32% year-on-year. August 2023 saw 197 potential tenants register for property listings – up from 149 in 2022.

This robust demand for rented accommodation is opening the door for landlords to step into the market.

62% of landlords cited current market conditions as an opportunity to increase yields.

For instance, the average UK rent has risen by 10.09% in the last year (according to the Homelet Rental Index), while the UK House Price Index shows price growth has only increased by 0.2%.

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How Do Landlords Feel About the UK House Prices?

The survey shows landlords are also optimistic about property prices moving forward. 40% of participants expect house prices to go up from 2024 onwards.

There are numerous resources that back up this outlook. For instance, easyMoney predicts house prices to reach £300K by 2025 – they are currently at £291,044 according to the Land Registry UK House Price Index.

While inflation and rising interest rates have caused a price slump in the housing market, falling inflation and halted interest rates give some hope that the market will correct itself in the near future. It remains to be seen whether prices will improve in 2024. However, once interest rates come down and wages come up – people will have more money to spend, and we should see real movement in the housing market again.

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

How Does LRG View the Property Market?

LRG acknowledges the issues facing the current market but also anticipates that interest rates will decrease in the run-up to the 2024 general election, boosting the housing sector for landlords and homebuyers. If you are looking to invest in Property, now is a good time.

LRG’s National Lettings MD Allison Thompon said:

“Demand for rental properties has seen a 32% increase since last year, with rental prices continuing to rise. This shows the return on investment for landlords remains positive. Those landlords we have recently surveyed remain optimistic about the opportunities available in the coming year. LRG’s resounding message to landlords is to remain committed on the basis that property investment is a reliable and lucrative long-term option.

“Furthermore, due to high levels of demand for rental properties and a slow-down in property sales, we’re increasingly providing lettings advice to homeowners who need to move but are struggling to sell or don’t want to reduce their house price. Across the country, across different property types and locations, many people in this position are taking advantage of unparalleled demand in the lettings sector.”

LRG’s research shows landlords share the same optimism.

68% of landlords responded to the survey and said they would maintain the current holdings, while 6% looked to expand their investments.

While challenges still face the UK housing market, both landlords and industry experts believe there are plenty of positives in the BTL market for the foreseeable future.

By Dale Barham

Source: RW Invest

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Short-term lets and holiday homes surpass buy-to-let income

Short-term lets – and specifically furnished holiday lets – are now generating greater profits for owners than the traditional long-term buy-to-let model, but there are downsides.

In the aftermath of the pandemic, short-term lets surged in popularity, when staycations became the only way – or the preferred way – to take a holiday compared with overseas travel. Even after Covid restrictions were largely lifted, more people still opted to holiday in the UK than pre-pandemic.

But the property type had already been rising through the ranks as a property investment option for a number of reasons, including recent buy-to-let tax changes that meant some landlords paid lower levels of tax on holiday lets than buy-to-lets.

Some recent research conducted by Hamptons, using official data from HM Revenue and Customs, has revealed that in the 2020-21 tax year, income for short-term lets in the UK hit £15,600, while traditional buy-to-let income generated £13,400. This is the first time income has been higher for holiday lets.

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Long-term landlords moving to short-term lets?

However, while there have been many reports over the past three years indicating that some landlords have ditched the long-term for the short-term rental option, the data reveals that in fact only 1.5% of all landlords are holiday let owners.

Therefore, the vast majority of landlords still see the highest value from their long-term rentals, putting paid to rumours of large numbers of landlords ditching the traditional buy-to-let model.

When looking at how the furnished holiday let industry has grown over the years, the study showed that 63,000 people made an income from 65,000 lets in 2020/21, up from 46,000 individuals who owned 50,000 holiday lets in 2011/12.

The report notes that there are two main reasons that the short-term lets sector has grown so much, the first being that the majority of such properties are used for both personal and commercial purposes. The commercial side in particular has grown in recent years, adding to the figures.

The other reason, as touched upon earlier, is the ‘staycation boom’ that boosted demand in the sector to a significant level, leading to more landlords and homeowners taking the opportunity to let out suitable properties to fill the need.

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

More income, same profit

Interestingly, while the report demonstrates the overall increase in income generated from short-term holiday lets, it also notes that due to rising running costs, owners of both property types end up with “a similar amount of cash in their pocket”.

According to Hamptons, running costs for a holiday let consume around 43% of the total income, while costs for a buy-to-let are around 31% of the total rental income, not taking financing costs into account. Furthermore, incomes are also currently forecast to fall back to pre-pandemic levels.

The maintenance costs that come with a furnished holiday let can include regular cleaning services, more frequent replacement of equipment and appliances due to the higher number of different guests, and more general wear and tear to carpets, fixtures and fittings.

Often, landlords with holiday lets will employ an agency to deal with the general management of the property, including listings and comings and goings, which further adds to the costs of short-term lets.

On the plus side, aside from the higher income you could receive – particularly for a well-located, well-turned out property – you could also benefit from its use as a holiday home. The property must be furnished and available for at least 210 days per year to legally count as a holiday let, but the rest of the time you could you it yourself.

From a tax perspective, there can also be certain benefits to short-term lets, which you can read more about here. This article will also tell you more about the rules and regulations that apply to running a short-term let.

By Eleanor Harvey

Source: Buy Association

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Is buy-to-let still a good investment?

Knowing when it’s a good time to buy a house as a prospective homeowner is hard enough, nevermind when you’re thinking about becoming a landlord.

Ultimately, no investment is without risk, and with coming changes in landlord legislation and market fluctuations, investing in property can certainly feel overwhelming. Factoring in whether now is a good time to buy makes the decision even trickier, but learning how to read the market means you can make an informed decision.

What’s the market like right now?

While there have been bumps in the road regarding mortgage rates, and many lenders pulled deals from the market after Kwasi Kwarteng’s 2022 mini budget announcement, investors can rest assured that it seems like the dust is settling.
Unfortunately, interest on buy-to-let mortgages has increased since the start of 2022 after historic lows. Like homeowners, those with existing fixed-year rates won’t see an impact on their finances now, but those looking to buy or refinance soon are likely to see fewer deals and higher rates for a while.

Although, it’s not all doom and gloom. With the close of the Help to Buy Scheme, there may be a larger number of first time buyers waiting to enter the housing market without the means to immediately do so. As such, they are naturally turning to rented accommodation as an alternative to buying. This is good news if you’re a landlord or are considering becoming one.

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Are you looking for a long or short-term buy-to-let investment?

While a transient first time buyer may only be a short-term tenant, it’s enough for you to get your foot in the door and give you time to start to think about your future buy-to-let plans.

Consider how long you want to be a landlord for, as this could impact whether it’s worth doing right now. If you don’t need easy and immediate access to the money you’re investing, then making a long-term investment is a good option. However, if you’re only in it for the short-term, then you may be subject to fluctuating house prices. That’s not to say that a return on your investment isn’t still possible, just less likely.

Understanding your local market

Planning is everything when it comes to investing in property, so taking the time to brush up on your local knowledge is invaluable, as each region differs from the next.

Get to know what the demand is like in your area by speaking to other landlords, estate agents, and by reading online forums. Doing your research and asking local experts means you’re able to make an educated decision about what is going to work best for you. For example, you might realise that buying a little further afield from where you originally planned is worth it if the rental market is flourishing in that area.

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

Landlord responsibilities

When making your final decision, keep in mind the purpose of letting out property is not solely to make money. You also have a responsibility to provide safe and secure housing to your tenants.


Source: Property Reporter

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Build to Rent offers plenty of room for growth

Build-to-Rent (BTR) remains a fast-growing sector with thousands of developments currently under construction, and this trend looks set to continue in 2023 and beyond.

The largest ever analysis of BTR in England shows that BTR has a broad and evolving customer base similar to the wider private rented sector and is a secure and cost-effective option for today’s renters.

In its third year, the Who Lives in Build-to-Rent? Report from the British Property Federation (BPF), Dataloft, BusinessLDN, and the UK Apartment Association (UKAA) analysed 122 schemes in England totalling over 40,000 residents in over 19,000 homes, representing over 25% of total completed BTR homes in the UK.

The urban component of the data, constituting 32,716 residents and 15,274 homes across 67 schemes, was benchmarked with tenants across the wider private rented sector. Amidst a highly volatile rental market, BTR was shown to offer the option of long secure leases, with 92 per cent of BTR schemes offering up to three-year leases, and a quarter – 25% – offering leases of more than three years. Close to a quarter (23%) of BTR tenants are currently in tenancies of three years, and over half – 53% – of leases were renewed over the last year.

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According to the research, three-quarters (73%) of residents living in BTR accommodation can access a co-working or meeting space, suiting new ways of working. Outdoor space is a core component of BTR, a much-coveted amenity, with 81% of BTR schemes having a shared garden or roof terrace. Nearly two-thirds (58%) of residents also have access to a gym, and a third (30%) fitness studios.

Also, 24-hour security, available at 69% of schemes, and concierge (85% of schemes) and parcel storage (79%) all add to the experience of living in a secure home and community.

The proportion of monthly income families, couples, and sharers spend on BTR homes is less than in the wider private rented sector, with singles paying only slightly more. BTR also adds value with its extensive range of amenities captured within the monthly rent – costs, such as gym membership or studio passes, that many renters incur separately when renting from private landlords.

The profile of renters living in BTR and the wider private rented sector is similar across age bands, with 87% of BTR and 85% of private renters aged 44 or under. A similar percentage of renters are single occupiers in both parts of the rental market. A higher proportion of the wider PRS is let to families than BTR, but this constituency is now a key target of BTR provision, with the growth of the single-family sector (low-rise individual family homes for rent).

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

Ian Fletcher, director of policy, British Property Federation, said: “This research continues to reinforce that Build-to-Rent homes cater to a diverse tenant base, comparable to that found in the private rented sector. BTR is delivering well-designed and professionally managed homes that provide value for money for tenants with its extensive range of amenities and long secure leases.

“BTR has rapidly established itself as an important and growing part of the housing market and continues to evolve to provides homes for a wide range of customers. Its diversification out of core cities and into single family housing demonstrates its increasing appeal and ability to cater to housing need.”

Brendan Geraghty, CEO, UK Apartment Association, commented, “This is amongst the most mature data available for BTR across England and points to a stabilising and predictable customer profile who are enjoying living within BTR communities. The report illustrates that the BTR product offering appeals to all home seekers and with its focus on quality, it’s clear that BTR is an increasingly popular and attractive choice amongst renters. Happy customers stay longer with the data indicating that BTR is lending a helping hand to create happy homes for all.”

Sandra Jones, Managing Director, Dataloft, added: “This research comes at a critical time in the UK rental market. Cities across the UK are faced with a shortage of homes to let which is putting acute upward pressure on rents and at a time when the cost of living is also rising. This report helps explain the important role that Build-to-Rent can play in alleviating shortage by showing how it is already meeting the needs of renters from a wide range of income brackets and age groups. While Build-to-Rent remains a small proportion of the total rental stock, its contribution is growing fast and its potential to relieve some of the pressure on supply is evident.”

By Marc Da Silva

Source: Property Industry Eye

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London rental properties letting within minutes

One lettings agency in London says that tenant demand is so great in the capital for rental properties that many homes are being let within minutes of becoming available.

Benham and Reeves point to demand created by the return of professionals and international students, along with the growing shortage of available properties to rent, for creating a ‘challenging market’.

Tenant enquiry levels have continued to increase over the summer, across the firm’s 19 branches.

They say this is the ‘Most competitive London rental market that we have ever known’.

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Many branches have had almost no stock
In addition, tenants are finding that many branches have had almost no stock available, at best one or two apartments available to rent.

In a market update, the agent says: “Many properties are renting within hours – and some within minutes – as applicants immediately make an enquiry as soon as a property goes live on our website.

“This is swiftly followed by a full asking rent offer and once agreed, a holding deposit – so anxious are they to secure a property.

“This of course is great news for buy-to-let investors who, in many parts of the capital, are seeing their rental properties let immediately with voids at an absolute minimum. Sometimes just a day or two.”

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

London is now a ‘landlord’s market’
The update also makes clear that the imbalance between supply and demand means that London is now a ‘landlord’s market’ with property investors expanding their property portfolios.

And rents are rising to pre-pandemic levels – some are now 10% higher.

Investors from overseas are also finding that the weakness of sterling makes London property considerably more affordable, while the shortage of rental properties means demand is the highest that the agent ‘has ever seen’.

Professionals returning to live and work in London, along with international students, are fuelling demand.

In some areas, including the City and east London, around 85% of applicants have been international students.

With the rental market so competitive, tenancy renewals remain at an all-time high – often more than 90% of existing tenants are renewing because they see there is a limited choice of properties available.

Source: Property 118

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A buy-to-let boom – why now’s an ideal time to grow your residential property portfolio

The property market moves fast – especially when it comes to residential buy-to-let investments which has seen a boom in recent years driven by the COVID stamp duty holiday which saw buy-to-let purchases up last year by 52% in London, 49% in the South East, and 41% in the South West.

Although the stamp duty holiday ended last Autumn and interest rates have since increased to the highest point they’ve been in more than a decade, buy-to-let remains an attractive investment for newcomers, or seasoned experts with large portfolios looking to expand. In fact, a recent survey conducted by BVA BDRC shows that 15% of 700 landlords surveyed are looking to buy more buy-to-let properties in the next 12 months and over half of the property investors looking to grow are planning to invest through a limited company. This is particularly the case in London where, according to Zoopla’s latest Rental Index, average monthly rent now stands at a whopping £1,698 – almost 16% more than this time last year.

Hybrid and remote working resulting from the pandemic has made rental demand for properties with a garden or proximity to public parks surge, so property investors are keeping a keen eye out for these. With the availability of rental properties decreasing and tenants competing for bigger homes with outdoor space, it is likely we’ll see rental prices continue increasing in the next 12 months.

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And if news headlines are to be believed, a recession is looming which is only going to boost demand further. Why? Because in a down-cycle, many lenders tend to retrench from lending to SME housebuilders and property developers. This is because property development is a counter-cyclical product – i.e. a lender needs to agree to fund in the middle of a down-cycle for something that will be built in 2-3 years’ time – which most aren’t willing to do. What this means is that when the market returns, there is virtually no new housing stock as none has been able to be built over the prior years because funding couldn’t be secured. Given the UK needs to develop 300,000 new homes each year to deal with the housing gap, this unwillingness from most lenders to lend through cycle is a real issue, and means that demand for homes will be even higher in a few years’ time. All these factors make expanding a buy-to-let portfolio right now all the more attractive.

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

However, with an increasingly competitive market comes the need to be able to finance purchases quickly. It’s no longer enough for investors to have their finger on the pulse when it comes to new developments or property markets. Those that can access funding quickly, at exactly the right time, will ultimately come out on top. That’s why we’ve introduced our new digital application for residential property investments. With loans ranging from £250,000 up to £3,000,000 for residential rental properties, limited companies can now get loan terms in just five minutes, without exchanging any emails or spending any time on the phone – if they don’t want or need to.

The next 12-18 months will present a number of challenges for SME housebuilders and property developers, but we want to reassure them that we are here to help and absolutely have the appetite to continue lending irrespective of what direction the economy goes in. If anything, we see this as an opportunity to step up to the plate and support businesses at a time when many other lenders will be pulling back.

Source: Property Week

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How the looming recession will hit house prices and buy-to-let landlords

The prospect of a recession is looming as economic growth fell for the second consecutive month in April.

Gross domestic product dropped by 0.3pc year-on-year in April, according to the Office for National Statistics. This was below economists’ expectations of 0.1pc growth and followed a 0.1pc fall in March.

The economy is “on course for a sharp contraction”, according to analysts Pantheon Macroeconomics.

A full blown recession is still “unlikely”, it said. But the property market is already at a turning point. Analysts have called the peak of house price growth and demand is disappearing fast.

Mortgage approvals for home purchases fell in April to their lowest level in two years, according to the Bank of England, dropping below the pre-pandemic average for the first time since the 2020 housing market shutdown.

Remortgage activity also fell below the pre-Covid benchmark, which suggests that interest rates have finally climbed high enough to put an end to the race to lock in cheap deals.

Savills estate agents has forecast house price falls of 1pc next year, following 7.5pc growth in 2022. After this will come three years of sluggish growth. Transactions in 2023 will fall by 13pc year-on-year, it said.

Soaring inflation is hitting real take-home pay just as rising mortgage costs are depleting buyers’ borrowing power and the cost-of-living crisis is destroying their ability to save.

Consumer confidence has plunged to a record low, meaning buyers will become nervous of taking on more debt and stretching themselves financially to purchase homes. As the chart below shows, in the past this has been linked to house price falls.

Sarah Coles, of fund shop Hargreaves Lansdown, said: “At this stage, the property market is positively festooned with red flags.”

Yet few analysts are anticipating a house price crash because there is still an extreme shortage of supply, and unemployment is at a record low. But how much could the economic outlook change?

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Will there be a recession?
British GDP rose by 0.8pc in the first three months of this year. But much of this growth was driven by high levels of government expenditure on Covid support measures. Pantheon Macroeconomics, has forecast falling Covid spending will detract a whole percentage point from quarterly GDP growth this spring, bringing a fall of 0.5pc compared to the first three months of the year.

“The risks to our below-consensus forecast that GDP will fall by 0.5pc quarter-on-quarter in Q2 now appear to be skewed slightly to the downside,” said Pantheon Macroeconomics.

The cost-of-living crisis is also taking its toll. “Evidence is now accumulating that the squeeze on real disposable incomes is throttling the economy,” it added.

But it does not expect there to be two consecutive quarters of decline, which is the official definition of a recession.

Yet there are different ways to characterise recessions. On a larger scale, the World Bank defines a global recession as a year in which the average citizen sees a drop in their real income.

This is already happening in the UK. Real regular pay flatlined in October and has since fallen for four consecutive months, according to the Office for National Statistics. In February, real pay was down 1.3pc year-on-year. The Office for Budget Responsibility, the fiscal watchdog, has forecast the biggest drop in real earnings on record this year.

During the global financial crisis, “real” pay fell by 1.5pc. This corresponded with an 18pc drop in house prices, according to Nationwide building societ

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

The cost of living crisis will hammer the rental sector
There is a risk that unemployment will rise, and this will hit lower income households first. This would bring a spike in tenants falling into arrears.

Neal Hudson, of BuiltPlace analysts, said: “It is renters I am most worried about. They were the worst hit by the pandemic, they are worst hit by the cost-of-living crisis, and they spend a higher proportion of their income on their housing costs. We will see the impact in the rental sector first, before the owner occupier market.”

If a large number of tenants fall into arrears, there could be a wave of forced sales from landlords, said Mr Hudson. “They are already feeling quite under pressure. A lot of them are reliant on debt; they are being squeezed by higher mortgage rates and by growing regulatory pressures.”

Landlords catering to lower income tenants will be most exposed, said Mr Hudson. Many of these places are also the areas in the North and Midlands that have seen huge buy-to-let investment over the last five to 10 years because low house prices have meant investors can achieve much higher yields than in London and the South.

“On paper, the yields in these places might look good, but when they factor in void periods and non-payments things will be pretty precarious,” said Mr Hudson.

Jumps in repossessions trigger house price falls
Forced sales, when homeowners have to accept discounts to sell fast, are one of the biggest drivers of house price falls. These are caused when people are no longer able to keep up with mortgage repayments, for example after losing their job.

The Centre for Economics and Business Research, a consultancy, has forecast that mortgage repossession claims will surge by 50pc by the end of this year. Over the next two years, they will jump 150pc; by 2024 it will be at the highest level since 2014, when the numbers were still inflated in the wake of the financial crisis.

But this anticipated jump is still small on a historical scale and analysts do not expect repossessions to escalate dramatically – partly because the value of lenders’ portfolios will suffer too if they enforce mass repossessions.

‘Stagnation rather than a crash’
Mr Hudson said: “The big thing the regulators and lenders learned in the early 1990s is that they want to avoid big numbers of repossessions and forced sales. They have a lot of flexibility and capacity for forbearance for existing homeowners. That is why I think we are looking at house price stagnation rather than a crash.”

But rising rates mean many homeowners may be pushed to sell up without being forcibly repossessed.

Ross Boyd, of mortgage comparison website Dashly, said: “There is going to be a remortgage crunch.” Many people are used to paying 1pc interest on their mortgages and will get a shock when they remortgage and find that rates have more than doubled, said Mr Boyd. Some will find they can no longer afford the repayments.

“It is starting now. The number of two-year fixed-rate deals that will expire in June is enormous because so many people bought from the summer of 2020,” said Mr Boyd.

By Melissa Lawford

Source: msn