THE LETTINGS YEAR AHEAD
Published 8 December 2023
This is the time of year when it is traditional to reflect on the past 12 months and make some predictions for the future, write Phil Cooper and Catherine Hunt. When it comes to the lettings market, the first of these is relatively straightforward; the second is much more tricky.
2023 was the year that landlords saw dramatic increases in the cost of their borrowing, mitigated to some extent by rising rents and the increase in property value which has continued to accrue. It also saw another 12 months slide by with the long-promised Renters Reform Bill yet again failing to make it onto the statute books.
This time last year, interest rates were at a relatively manageable 3%, despite having just been hiked in the wake of the Truss/Kwarteng economic experiment. Twelve months on they stand at 5.25%; that means that for many landlords, costs have almost doubled.
It has been a tough year for landlords and tenants too, to be fair.
Meanwhile, the long-awaited Renters Reform Bill, which was part of the Conservative manifesto at the 2019 election, and which proposed to introduce such measures as abolishing Section 21 evictions and making it illegal for landlords to refuse to rent properties to people who receive benefits or have children, continues to languish at the back of the queue for Parliamentary approval.
All of this is contributing to a feeling of uncertainty which, with a General Election almost certain to happen in 2024, is unlikely to dissipate next year.
It is clear that housing is going to be a key battleground in the election, and this time around it will be just as much about tenants in the private rental sector as homeowners. There are now more tenants than mortgage-holders in the UK, and all political parties realise that those tenants have an increasingly powerful political voice.
The good news for both landlords and tenants is that those issues previously affecting supply seem to have dissipated and, in general, more properties are available at this time. The wide-held view that interest rates have peaked is encouraging investors to return to the market. Good levels of rent are still being achieved and with continued demand this is anticipated to continue into 2024.
Whilst the political environment remains fluid, the economic realities of high demand for rental properties, potential falling borrowing costs, combine to offer landlords confidence for 2024.
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