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Housing market

Discussion in 'off topic' started by matt j, Feb 2, 2022.

  1. hifinutt

    hifinutt hifinutt

    Just watching these nightmare tenant programmes where they trash the place is enough to put many off being landlords .weed farms are another risk ..we have had several on our street !!
  2. mandryka

    mandryka pfm Member

    The key questions as I see them are:

    1. How will the capital value evolve over the medium term
    2. How will rental income evolve.
    3. How will legislation evolve -- in particular will significant capital investment be required by law and will the owner be able to get vacant possession of his property when he wants to sell.
    4. How will the institutional investors want the mortgage companies to deal with defaulting payers.

    We'll know the answer to 4 soon: I'd be slightly surprised if there's a significant wave of repossessions, but if there is there will be bargains to be snapped up. And if the rentals market remains free for housing which isn't at the bottom of the chain
    (a free market for non-social housing), revenues from rents will be attractive. I'm still up to grab things in London (because I can manage them here, I know the market.) Is it better than putting £1M on deposit for 5 years at 4.6% -- well, maybe, and its more fun.
  3. mandryka

    mandryka pfm Member

    One thing to mention. Apparently the Build to Rent business is buoyant. And these flats, they're often for the bottom of the chain, for social housing, where there's a higher proportion of bad tenants who don't pay. This in a political environment where S21 is scheduled to end. What is it that these Build to Let businesses understand that I don't?
  4. Mike Reed

    Mike Reed pfm Member

    Assuming even low-value flats are going to depreciate from their 2022 market values and because of the diminishing CGT allowance alone, I'm probably treading water on averaged income by not selling up this tax year and giving the tenant peace of mind for another year. However, there's little to be done but sit tight and await further squeezes or sunny uplands. The latter is certainly circumscribed by dint of my age.

    The current incumbent will certainly be the last and I hope he gets his affairs sorted before my ability to be a landlord reaches its nadir. Can't say I'm optimistic though, as a 4 bed shared house needs to be acquired by ex partner or sold on the market and he seems happy with his current arrangements re. his children etc. One thing rarely said about a landlord's lot is the need, as I see it, to be a good one with a humane approach; maybe a rarity but certainly a difficult path on occasion.
  5. Barrymagrec

    Barrymagrec pfm Member

    Also known as Sharon fruit, not to my taste either.
  6. Ponty

    Ponty pfm Member

    All valid points. I’ve always said if I could get 5% hassle and risk free, I wouldn’t bother being a landlord. 4.6 is close enough but I can’t access existing capital employed without a tax bill. The govt have effectively forced me to be a landlord indefinitely. I’m open to additional opportunities but they’d have to be really compelling and based on my property viewing yesterday, the market remains overheated.
  7. Ponty

    Ponty pfm Member

    Is the govt underwriting the rent?
  8. Joco

    Joco pfm Member

    With all the bad press the Tories are getting, they may be for refugees and for families who can’t otherwise get accommodation. I would expect the quality would be basic but better than many of the alternatives being used at present.
    Of course State / Council housing would be better still but realistically they won’t be by this or any other Govt.
  9. Ponty

    Ponty pfm Member

    Latest market research from Savills just in…

    Rental growth in 2022
    Last year’s rental market was characterised by a significant imbalance between constrained supply and buoyant demand in the rental market. That drove strong rental growth across both the mainstream and prime markets, despite rising cost of living pressures.

    Our own indices suggest rental values of prime properties across Londonincreased by +10.9% in 2022, up from the +6.6% growth in the preceding 12 months. However, after three incredibly strong quarters of growth, rental values rose by a more modest +0.7% in the traditionally quieter final three months of the year.

    Smaller properties tended to see the strongest rental growth over this period, driven by unmet “needs-based” demand. And while we did start to see a little more stock come to the market from accidental landlords, these generally continued to be let quickly.

    Meanwhile, rental values of prime properties in the commuter belt rose by +5.6% over the course of 2022. In contrast to London, this was slightly lower than the +8.0% seen in 2021, which was fuelled by the race to the country in the immediate wake of the pandemic. Again, we saw continued rental growth in the last quarter of the year, though this was primarily driven by markets further from the capital.

    Over the course of 2023, we expect to see levels of rental growth moderate, both as the supply-demand imbalance gradually eases, and as tenants become more cost-conscious given the underlying economic backdrop. Look out for our prime rental forecasts which will be released shortly.

    How does this compare to house prices?
    In contrast, the tide of the sales market appears to have turned and house price growth has given way to price falls.

    In the mainstream market, the Nationwide house price index suggested that annual house price growth ended the year at +2.8%, on the back of price falls of -2.4% in the final three months of the year. Meanwhile, price adjustments in the prime market have been more modest.

    What’s changed over the past 10 years?
    Last week we saw the ONS release the first housing statistics from the 2021 census.

    This showed the number of private rented households across England rose by just over 1m to 4.79m in total between 2011 and 2021. That marks a 29% increase.

    The significant barriers to home ownership in London were clearly reflected in these figures, as 20% of this increase occurred in the capital. Here, three in ten households are now in the private rented sector.

    Meanwhile, the latest English Housing survey (released in December) adds more colour to this picture. It indicates most of the growth in households in the private rented sector actually occurred in the first five years of the last ten, with little change in between 2016-17 and 2021-22.

    In part, this reflects Government initiatives to support home ownership, such as Help to Buy (which has now ended). But it also reflects financial and regulatory pressures on private landlords, which have curtailed further expansion of the sector to meet demand.

    The English Housing survey also indicates that while households under the age of 35 account for 45% of all private tenants, the growth seen in the past ten years has been driven by older households. In fact, it suggests 48% growth in renting among households over the age of 45, as demands on existing private rented stock continue to evolve.
  10. mandryka

    mandryka pfm Member

    I think the build to rent schemes are mostly developments for yuppies, let on the open market at a market rent, and with a significant service charge. But in order to get planning permission, councils are encouraged to do a deal which involves providing a proportion at 20% less than market rent, and agree with the Build to Rent managers the eligibility criteria for occupancy.
  11. mandryka

    mandryka pfm Member

    Re those events in Q4 22, they’re not seasonally adjusted figures are they?
  12. Gingerbeard

    Gingerbeard Ayup Me Duck

    Yep, my ex use to be associated with the construction industry and she always said they were 'beyond sh*t'
    hifinutt likes this.
  13. darrenyeats

    darrenyeats pfm Member

    I once again quote Matt's excellent post.
    If small landlords gradually leave the market and go into bonds, think about what the institutions do to invest that money.

    Housing reform must include the big rental players. Somehow they always escape the bulk of measures.
    Last edited: Jan 14, 2023
  14. Yank

    Yank Bulbous Also Tapered

    My fear is that the only two ways to get housing costs back in line with real people's incomes is to either (1) crash the economy, or (b) inflate the rest of the economy while somehow holding housing prices steady.
  15. LecsonQuad

    LecsonQuad pfm Member

    The way to get housing costs back in line with income is possible by varying the rate of tax probably monthly so that peoples disposable income doesn't increase whatever the rate of inflation or interest is thus making it impossible for anyone to pay higher property prices. This needs to be coupled with a programme of building properties. Simple but no policitian will do it.
  16. stevec67

    stevec67 pfm Member

    The first part of this is impossible. The complexity of such a scheme is unimaginable. By all means raise taxes, but monthly adjustments? No way.
  17. sean99

    sean99 pfm Member

    There's a third option - a national home building program, similar to what was seen after WW2. However it lacks political backing, and would be fiercely opposed by NIMBYs. It would be, by far, the best approach, though - and the houses could be made energy efficient and sited near public transport. Even better if brownfield sites are used.
    Sue Pertwee-Tyr likes this.
  18. Yank

    Yank Bulbous Also Tapered

    Some urban blight areas could be redeveloped, although this would also cause an uproar.
  19. stevec67

    stevec67 pfm Member

    Not necessarily. When the HS2 railway was proposed the plan was to demolish a frankly shxxtty bit of Sheffield to build the station. The BBC went up hoping for outraged residents complaining that they had lived there for 30 years, they loved the area, etc. Wrong. They found 2 or 3 residents all saying "great news. This part of town's a dump. If they buy this I can buy a better place near my sister's house, it's nice there."
    The same happened when a grotty bit of Grimsby was redeveloped, they pushed down the nasty Victorian terraces and built pleasant social housing, the locals were delighted. It had got so bad there that half the street was empty and taxi drivers wouldn't stop there.
    The bigger problem with brownfield sites is that it can cost more to knock down the old buildings and clear the site than build new. Asbestos, contaminated land, or even just heavy concrete construction can cost a fortune to remove.
    darrenyeats likes this.
  20. Yank

    Yank Bulbous Also Tapered

    In the US there are large areas of many inner cities that look more like this:


    ...where non-viable dwellings have either already been removed, or are boarded up. It would be very easy, physically, to raze what's left and redevelop.
    Sue Pertwee-Tyr likes this.

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