We’re already three months into the new year and plenty has happened in the property market. March has provided us with the Chancellor’s Spring Budget, a predictable rise in interest rates, and new guides to renting in the UK. Here’s everything you may have missed this March:
The Spring Budget
On 15th March, Chancellor Jeremy Hunt released his Spring Budget statement, with much of its contents pertaining to the property market. He stated his intention to continue with government assistance for rising energy bills, stated that Britain would narrowly miss being in a technical recession, and detailed his projections for reducing inflation to 2.9% by the end of the year. This ‘back to work budget’ also outlined some measures the government will be taking to ease the transition back to work for parents by providing greater childcare support. Overall, the combination of better childcare support, reduced inflation and energy bill assistance should provide the average household with more disposable income and more opportunities to save money to achieve their property goals. This could mean saving up for a refurbishment, expanding your property portfolio or moving into a newer, larger home.
For more information on the impact the Spring Budget could have on your property goals, explore the full summary in our blog.
Interest Rates Rise
Towards the end of March, the Bank of England announced their increase to the base rate of 0.25%, which has pushed interest rates to 4.25%, the highest they have been in fourteen years. This is the eleventh consecutive rise to interest rates, with the Bank of England increasing the base rate as a means of tackling inflation. With the inflation target sitting at 2% and the government making bold claims in the Spring Budget to reduce inflation significantly, it is no shock that the Bank of England has chosen to increase the base rate this March. Although these rapid increases initially caused rising interest rates in the mortgage market, these rates are now beginning to stabilise as the economy readjusts to this ‘new normal’.
New How To Rent Guide Published
An updated How To Rent guide has been published this March, with this republication being the first since the height of the coronavirus pandemic. This is an exceptionally important document for landlords, as failure to provide your tenants with a copy of this document will leave landlords vulnerable by inhibiting their ability to serve a Section 21 notice. Even if you have already provided your tenants with the old guide, you must provide the most updated version upon tenancy renewal. There are also important amends to the implementation of carbon monoxide alarms, with landlords now being required to fit them in every room which holds a fuel burning appliance. There are additional recommendations regarding making properties suitable for disabilities, providing EICR’s to tenants, and fitting smart meters.
Rental Demand Is Soaring
Speaking of rental properties, the latest Zoopla reports have revealed that the lettings sector is thriving. An increase in numbers of students from overseas, paired with high economic immigration, has provided a surge in demand for rental properties across the UK. As such, rental demand is 10% higher now than it was at the same time last year. Rental demand is set to surge even more, with the number of privately rentable homes available on the market remaining static whilst buy-to-let landlords feel the pinch of increasing mortgage rates which have proved to be a deterrent to further investment.
A Mixed March For Commercial
The start of 2023 has proven to be beneficial for some commercial sectors whilst being a struggle for others. Prime equivalent yields are on the rise for shopping centres and regional pubs, but are slipping for industrial multi-lets, provincial offices and retail warehouses. As such, it is difficult to make a sweeping statement about whether commercial real estate is on the rise or not. However, it has been an undoubtedly slow start to the year for the commercial sector overall, with £3.2 billion being invested over January and February, a decrease of 64% when compared to last year. Despite this, commercial agents remain optimistic for the rest of the year, with the spectre of a recession posing less of a threat after the Chancellor’s announcement during the Spring Budget, which should provide some resilience to the commercial property market for the remainder of the year.
Zoopla House Price Index
The latest edition of Zoopla’s House Price Index and Rental Market Report reveal that despite the modest fall in prices over the past few months, demand for homes is still 8 per cent higher than it was prior to the pandemic. This is a strong indication that despite increasing mortgage rates, the housing market remains strong when viewed within the context of historical trends.
Higher mortgage rates are undoubtedly impacting the buy to let sector, which is explored in Zoopla’s Rental Market Report, with their research revealing that rental supply is set to remain limited. However, for landlords with an existing portfolio or looking to make cash purchases for buy to let properties, the market looks very favourable – with demand for rental properties on the rise and the number of available units down by one third, it’s certainly a good time for those with existing and growing property portfolios.
Stay In The Loop
With services spanning from sales to lettings, build to rent to asset management, commercial to residential, you can rest assured that Centrick is able to cover all of your property needs. With monthly property updates, guides for investors, tenants and home movers, and detailed property market forecasts, Centrick is your one-stop shop for reliable and regular property news.
What else does 2023 hold for the property market? Download our property market forecast for the year ahead below: