August Newsletter - House prices forecast to increase 1.2% over the next three months

In this month's edition, forecasts suggests that the market could see an average increase in house prices of 1.2% in the near future, estate agents are bracing themselves for new regulations imposed by the Government, the Summer has seen an upsurge in tenant demand and finally, we take a look at whether the appointment of a new Prime Minister means anything for the market at large.

House prices forecast to increase 1.2% over the next three months

A new study from reallymoving.com has found that current market conditions are indicating a 1.2% increase in property prices over the next three months of summer, which bodes well for a strong summer. To that end, the average price for a property in the UK now stands at £237,110.

These figures are supported by analysis by the Halifax looking at house prices over the last quarter. The latest Halifax house price index showed that property values actually increased by 2.4% over the last quarter, with Russell Galley, Managing Director of Halifax, explaining: “Generally the housing market is displaying a reasonable degree of resilience in the face of political and economic uncertainty. Recent figures show demand looking slightly more stable, with mortgage approvals ticking along just above the long-term average.”

With regional markets also showing resilience in the face of the potential instability that can be attributed to the ongoing Brexit uncertainty, property is set for another strong quarter. Eight of the twelve regions of the United Kingdom are set to see prices rise in the period to September 2019, with Northern Ireland and Wales all showing extremely positive growth.

Rob Houghton, CEO of reallymoving.com noted: “The chance of us leaving the EU without a deal seems increasingly likely and people are realising that the window between now and the end of October may present their best opportunity to sell. The market has proved itself to be surprisingly stable over the last twelve months.”

Tenant demand sees upsurge during the Summer

Since the introduction of the Tenant Fees Act in June this year, tenant demand has increased to some seven times higher than at the same point last year. Perhaps somewhat unsurprisingly, many prospective tenants seem to have waited until the new legislation came into place on 1st June before committing to a property, leading to a huge upsurge in demand.

Between May and June, tenant demand is usually fairly static at around 1% over the past few years; however, this year’s increase stands at 7%. With such a rise in the number of potential renters in the marketplace, the number of property viewings also increased in July, as did the number of property transactions in turn.

Rightmove’s commercial director and housing market analyst Miles Shipside has said: “A spike in tenants looking for a new place to live indicates some unsurprisingly held out until fees to start a new tenancy were removed by the government at the start of June. The ongoing shortage of quality stock could end up being exacerbated further by landlords whose tenants are now giving their notice so they can move on without paying fees, and some of those landlords then choosing to sell up rather than let it out again.”

It would appear that the introduction of the Tenant Fees Act has led to a summer peak for the lettings market, with landlords benefitting from a saturated marketplace and rental properties being let more quickly. In the short-term, this is, of course, excellent for landlords looking to let their properties currently, and in the long term, this may suggest that the introduction of the Tenant Fee Ban will lead to more tenants in the marketplace due to it being much cheaper to move into a rental property than previously.

Does Boris Johnson's appointment affect the property market?

The United Kingdom now has a new Prime Minister which moves us on swiftly from Theresa May’s reign as our second-ever female leader. Love him or loathe him, Boris Johnson is now leading the country into a historic era in terms of relations with Europe and the rest of the world. With the appointment of Johnson comes a step-change in political policy, but what does his appointment mean for the property market, if anything?

During the midst of his campaign to become Prime Minister, Johnson made some proposals which could have far-reaching consequences for the property market – many of which could be extremely positive.

One of the key proposals that the man dubbed Bojo has put forwards revolves around stamp duty; for properties that cost less than half a million pounds stamp duty would be completely cut, and at the other end of the scale properties valued at over £1.5m would see rates cut from 12% to 7%. This latter proposal, in particular, could have a welcome impact to housing in the capital city due to the higher values of property prevalent throughout London.

These changes would be welcome to all in the property sector and could potentially signal an upsurge in property transaction levels, should they come into place. For the lettings market also, which has been subject to many legal changes in the past few months, this incentive could lead to growth.

The new Housing Minister, Robert Jenrick, has decried his modus operandi for property as “We will focus relentlessly on boosting supply and homeownership,” adding that “As the Prime Minister has made clear, we’re determined to close the opportunity gap and give millions of young people the chance to own their own homes.”

As well as appointing a comparatively youthful Housing Minister (Jenrick is the first cabinet minister to have been born in the 1980s), Boris Johnson has also appointed Sir Edward Lister as Chief of Staff. With Lister’s former employment being as chairman of Homes England, he brings with him a wealth of property insight to one of the top cabinet positions, which may benefit the industry in the long-term.

It seems that the sentiment amongst estate agents is positive with regards to Johnson’s appointment with Iain McKenzie, the Chief Executive of The Guild of Property Professionals, affirming that: “I am in favour of anyone who is going to improve sentiment or confidence in the housing market. Current economic data is strong, but the uncertainty of Brexit has caused stagnation in the market. Mr Johnson’s commitment to ‘deliver Brexit’ on 31st October with a new ‘can do’ spirit is therefore very much welcomed.”

New regulations proposed for Estate Agents set to change industry

The government has published far-reaching proposals which, if put into place, will truly transform the practice of estate agency into a more regulated and rigorous profession. The proposals should give confidence to buyers and sellers, and for agents themselves, there is the opportunity to be recognised for their expertise.

The report from the Ministry for Housing, Communities and Local Government (MHCLG) is based upon recommendations from the Regulation of Property Agents (RoPA) working group, established a year ago by the ministry. In it, the report focuses heavily on the regulation of the industry, training of those that work in the industry and the process of licensing in order to keep on raising professional standards in such a key industry.

Mark Hayward, the Chief Executive of the National Association of Estate Agents, welcomed the news from the RoPA, stating: "This is a significant moment for those in the property industry and a huge leap forward in stamping out bad practice. We have long called for Government intervention to ensure everyone in the industry is licensed, adheres to a strict code of practice and holds at least a Level 3 qualification (A-level). Following the extensive considerations by the working group, it is now for the Government to create the structures for a properly regulated industry, whose professional knowledge and skills are trusted and respected by all.”

Key Recommendations:
• All agencies operating a residential property business should be licensed
• All customer-facing staff employed within such residential agencies should be licensed and agree to adhere to a Code of Practice
• For specific activities, mandated by the government, a Level 3 or above qualification will be necessary
• A regulator will be appointed to oversee compliance
• Whilst recommendations from a working group may not seem immediately relevant, the report which has been produced will form the basis of fresh government legislation on the subject, with the working party’s Chairman, Lord Best, stating that some of the key proposals will be realised in the next two years.

Click here to read the full RoPA report