Greenstone's October Newsletter

Welcome to the October edition of the Greenstone newsletter.

This month we discover:

- Whether now is the right time to consider remortgaging

- What are the key selling points of a home in 2022?

- Shortages in the rental market sees growth accelerate to above 12%

- Tenants are staying put as rents continue to rise. Could now be an ideal time to think about expanding your portfolio and taking up our fully managed services?

We hope you enjoy this month's edition. We also provide property tips, insights, and updates on our social media channels, which you can click to follow at the end of our newsletter. As always, please get in touch if you have any property queries.

Best regards

Lewis Green, Director

Your stamp duty and mortgage holiday questions answered

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Fellows Road, Swiss Cottage

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Should I consider remortgaging now?

As of September, mortgage rates rose for the 11th consecutive month, while options for buyers on the market declined as the industry continues to adjust to higher interest rates.

The average cost of a two-year fixed rate mortgage reached a high of 4.5% in September, an increase of 1.9% since December last year.

According to Moneyfacts, the typical cost of a five-year fixed rate mortgage also rose to 4.33%, an increase of 1.69% since December, and the highest level since November 2012.

Meanwhile, lenders have withdrawn over 500 mortgage products during the past month, leaving 3,890 different deals for borrowers to choose from. This is the lowest level since April 2021 and it’s a fall from more than 5,300 deals at the beginning of December.

The number of different mortgages available dropped for all types of borrowers, from first-time-buyers, to those with large equity stakes in their property.

As for good news, the average amount of time a mortgage is available for before lenders withdraw it is increasing from a record low of 17 days back in August, to 28 days in September.

What are the causes?

Growing inflation has a domino effect, from an increase in the Bank of England’s base rate to higher mortgage rates.

The Bank’s Monetary Policy Committee has hiked the base rate by 1.65% since December last year, in an effort to control inflation.

The increases make it more expensive for lenders to borrow money on the money markers, which leads to the higher mortgage rates for customers.

Is it still a good idea to remortgage?

Despite the increase in mortgage rates seen since December last year, it is still definitely worth remortgaging if you are coming to the end of your current deal.

The average standard variable rate, which is the rate that lenders put you on if you don’t remortgage, has reached 5.4%, the highest level since December 2008.

This rate has seen a continuous growth for nine consecutive months, rising by 0.23% in August, the largest monthly jump ever recorded by Moneyfacts, which started keeping records in December 2007.

The rising rate isn’t expected to slow down any time soon, as standard variable rates typically move up and down in line with changes to the base rate.

Although interest on the average two-year fixed rate mortgage has now reached 4.24%, homeowners with a £200,000 mortgage could still save £136 a month by choosing to remortgage, rather than sitting on their lender’s standard variable rate. This is without even factoring in future interest rate rises.

The advantages of remortgaging

The main benefit to remortgaging is being able to save money by switching to a cheaper deal.

When your fixed, tracker or discounted mortgage deal ends, you will no longer benefit from a preferential rate. Instead, you will automatically move onto your lender’s standard variable rate, and your payments are likely to jump.

Another advantage of remortgaging is that you can ask to borrow more money to carry out home improvements, which will secure a healthy investment in the long run.

You can also lower or increase your mortgage term when you remortgage if you meet the bank’s eligibility criteria, which will further lower your monthly spends.

If you’ve been considering making your next property move and are looking for advice, get in touch with us today.

Shortage sees rental growth accelerate to above 12%

While many Brits are grappling with the cost-of-living crisis, rising interest rates and inflation, saving for a hefty deposit is resolvedly taking a backseat and potential homeowners may be choosing to hold off until price growth in the housing market cools down.

As ongoing undersupply of rental homes has pushed growth to 12.3% and, with no indication that this will change any time soon, rents are predicted to continue to post above-average growth rates into 2023, despite cost-of-living headwinds, according to the latest data released by Zoopla.

The rise in tenant interest could be a result of thousands of Brits seeking a temporary home during times of a challenging economic climate. Additionally, tenants who have already secured their lease are more reluctant to move out, with competition for housing rising, resulting in an increase of long-term tenancies - which provides landlords with a stable flow of income.

There are now 24% more tenants choosing to extend their lease than in 2019, and the number is 13% up from last year alone.

Growth in tenant enquiries

Rising rents are largely driven by a shortage of available rental stock, with low volumes struggling to meet the high rate of demand, rising over the past three years. Throughout this year, the rental market has seen continuous growth in tenant enquiries due to a combination of factors including the post-pandemic search for space, tenants returning to the city and a challenging economic climate leaving people unable to save for house deposits for the time being.

No signs of significantly improved rental supply

Zoopla also warns of there being no real prospect of significant improvement in rental stock any time soon, as private landlords continue to sell due to uncertainty towards changing legislation, and renters staying put in their current homes. Higher mortgage rates will compound the pressure on demand, making it more difficult for would-be first-time-buyers to stop renting and purchase a home.

The property portal highlights that 3 in 4 renters will choose to remain in their current property – which means they will experience lower levels of rental growth at 4% or less – this will underpin the imbalance of supply and demand in the market as a result.

Homes in the city centre grow in appeal

Renters seeking out smaller homes with lower running costs appear to be flocking towards new-build city centre flats.

Zoopla’s report acknowledges that rental growth is ranging from 7.6% in the North East, to a staggering 18% in London.

The strongest performing urban markets are London (17.8%). Manchester (15.5%), Glasgow (14.4%) and Bristol (12.9%) – where rental growth is standing above the UK average of 12.3%.

Outlook for the rest of the year, into 2023

The disparity between supply and demand is here to stay, and rents are expected to rise to above-average levels across the more affordable markets. There is still space for renters to pay more – especially outside of London and the South East – where rental affordability will remain a drag on demand.

Have you been considering embarking on the journey to become a landlord? Get in touch to find out how much your property is worth, and how we can support you.

Tenants stay put due to rising rents: Is it time to go fully managed?

According to data from Propertymark, a shortage of rental stock is fuelling the surge in renters staying put, with 73% of letting agents saying they have seen a growth in the number of tenants renewing contracts over the past year.

Increase in long-term tenants

The rental market has seen a vast increase in tenancy renewals due to a shortage of stock, which has had a knock-on effect on rising rents. Remaining in the property is currently far more desirable than taking the risk with another property, or location, in a time of economic discomfort.

Propertymark’s July Private Rented Sector Report detailed the continuous surge in rental demand, with an average of 127 new applicants registered per member branch last month, noting that “this number has been on a slow upward trend since February.”

The imbalance between supply and demand has led to 82% of agents acknowledging that month-on-month rent prices increased in July, which has continued to date. Pressure on rents has been steadfast since last year, with the cost-of-living crisis and rising inflation playing equal parts in the increases.

The cost-of-living crisis has created a vast number of long-term tenants, as saving for a deposit takes a back seat for the time being. The rental growth caused by current rampant demand is also a huge driving factor behind many people choosing to delay taking out a mortgage until supply picks back up, making rental accommodation a highly popular choice. Becoming a landlord in today’s climate allows the investor to generate capital growth, as their yield grows while the property value increases.

Is now the time to go fully managed?

With the disparity between supply and demand underpinning a rise in inflation, UK landlords are reaping the benefits of getting their foot in the door during a time of peak buoyancy. As the average property price increases, future sale prices also increase, meaning a buy-to-rent asset increases in value over time.

However, such an asset can be difficult and time-consuming to manage without help, particularly for new landlords who are still learning the ropes. The prospect of long-term tenants presents its own challenges too, as long-term use of a property demands more regular check-ups and maintenance.

To help landlords secure and maintain long-term tenants, Greenstone can:

Offer maximum exposure online to ensure we find the right tenant for you.
Arrange the tenancy: We handle everything from references to running credit checks, securing deposits, and drawing up tenancy agreements.
We ensure all Tenancy Compliance is met making sure there are no breaches
We are Members of ARLA Property Mark and keep up to date with latest legislation
Collect rent: We can collect rent from your tenants and follow up on any late payments.
Answer tenant queries, deal with issues and concerns, and handle maintenance or repair work that needs scheduling.

Greenstone has 2 dedicated property managers dealing with all aspects of property management, rent collection and maintenance. We have fine-tuned our systems to ensure everything runs smoothly, from start to finish.

Additionally, when you take our fully managed service we collect our full commission as we collect rent, whether monthly or quarterly therefore no up front fees, giving better cashflow to the Landlord.

Fully managed services can ensure the quality of your tenants

One of the most important reasons for becoming fully managed is to ensure that you have high-quality, dependable tenants. A managed service can help you to create long-term, positive relationships with tenants who are loyal, pay their rent on time and keep your property in good condition – giving you peace of mind.

If your tenants are staying put for longer, our fully managed services will alleviate the stress of taking care of your property. Find out more by getting in touch today.

What are the key selling points of a home in 2022?

If you’re wondering how valuable your home is, knowing its most desirable assets is a good place to start. Estate agents know exactly which features are hot on the market right now, which is why they are highlighted in listings to make sure the property is easily spotted by suitable buyers.

Data from Rightmove suggests which features buyers are looking for in today’s market, by ranking the most popular ‘key words’ highlighted by estate agents to sell houses. Due to a change in working patterns, there has been a clear move towards garden offices, orangeries, summer houses, underfloor heating, bi-fold doors and open-plan rooms. If your house has any of these features to offer, your home could be extremely appealing to buyers in today’s market.

Take a look at the features that are highlighted to attract the most potential buyers in 2022.

Garden office

Working from home has become a new way of life, and this has caused many people to move entirely in search of better office space.

Advertising a spare room which is suitable for a home office with good ventilation, accessible outlets to plug in a computer setup and ample space for a desk will make your home extremely attractive to many buyers. The proportion of listings that mention garden offices, were found to be 11 times higher than a decade ago. That’s an increase of 1,046%!

Bi-fold doors

Rightmove reported a huge rise in demand for bi-fold doors, with a 589% increase in popularity compared to 10 years ago. The post-pandemic need for space is thought to be the driving force behind this feature becoming so sought-after, as this enables people to extend and diversify their living space.

Orangeries and summer houses

What sets orangeries apart from conservatories, is the bricks in place of glass. The name originates from where fruit trees were stored during the winter months, so that should tell you how cosy and warm these home extensions are. The number of property listings mentioning summer houses has also seen an increase, whereas greenhouses seem to have declined in popularity. Smaller windows allow for a more functional and dynamic space, allowing scope for multiple uses such as home offices, living rooms, and dining space.

Underfloor heating

Listings that feature underfloor heating jumped by 114%, as buyers search for more energy-efficient solutions to warm up the house.

Underfloor heating is a cleaner, smarter way to heat a home. Using radiant heat technology, under-floor heating gently warms people and objects in the room directly, from the ground up.

Open plan living

Open floor plans remain popular among families and busy households due to their better traffic flow and multifunctional spaces. The wide-open space is most desirable for those with larger families as the layout offers a grand communal area. Consider removing a wall that separates your kitchen from your dining room, and your listing will become more attractive to buyers looking for a family home.

Looking for advice on how you can improve your property before selling? Contact us today.