Martin Bull looks at the Spring Budget 2024 and talks about the key elements for the property market, affecting those selling, buying and letting property.
You can see monthly snapshots of the sales and lettings data on our website for Dorking and Leatherhead using the links below:
Dorking
Tel: 01306 406506
Email: dorking@ewemove.com
Leatherhead
Tel: 01372 701702
Email: leatherhead@ewemove.com
Martin Bull shares our latest insights into the sales & lettings markets nationally and locally.
You can see monthly snapshots of the sales and lettings data on our website for Dorking and Leatherhead using the links below:
Dorking
Tel: 01306 406506
Email: dorking@ewemove.com
Leatherhead
Tel: 01372 701702
Email: leatherhead@ewemove.com
The perception has been growing that landlords and the rented sector are an easy target for a government clamouring for headline ‘wins’ on the battle against carbon. Rightly or wrongly, Landlords are seen as an easy target with the perception they have the wealth to afford changes that will improve the lives of their tenants and help the government meet international commitments made. COP27 held in November 2022 in Egypt and more recently, COP 28 which has just concluded in Dubai have resulted in a range of new commitments that need to be turned into action by governments.
None of this is news to landlords, who have long felt somewhat like they are being asked to bear a disproportionate burden of the regulatory changes that are subsequently introduced. But perhaps the landscape is changing? A recent study by British Gas suggests that landlords are becoming more receptive to the idea of investing in improvements to deliver greener technology and more energy efficient homes, in part because of a realisation that investment can deliver financial returns.
With the likelihood that legislative change proposed as part of the Renters (Reform) Bill will impose a new test around market rent, for a landlord looking to command a premium rent, ensuring their property can justify that increase means offering something different – something that provides additional value. We know from our own experience talking to buyers and prospective tenants that energy efficiency and the cost of running a building are factors they consider and as such the direct correlation between energy efficiency and ‘value’ is clear. Consequently, if the ‘market rent’ provisions of the Renters (Reform) Bill do come into effect, we expect to see energy efficiency features in a property used as the basis of justifying higher rental values for specific properties.
Whilst the proposed increase in the minimum required EPC rating now looks like it will not come into effect, good old fashioned free market economies are keeping the issue in focus and may well be the catalyst that makes investment by landlords a proactive decision, not a reactive – and resented – process.
If you would like to know more about the way different energy efficiency measures can add value to your properties, please speak with Graham Faulkner.
Dorking
Tel: 01306 406506
Email: dorking@ewemove.com
Leatherhead
Tel: 01372 701702
Email: leatherhead@ewemove.com
Graham Faulkner
Branch Director
Martin Bull shares our latest insights into the sales & lettings markets nationally and locally.
You can see monthly snapshots of the sales and lettings data on our website for Dorking and Leatherhead using the links below:
Dorking
Tel: 01306 406506
Email: dorking@ewemove.com
Leatherhead
Tel: 01372 701702
Email: leatherhead@ewemove.com
The sales & lettings markets continue to be subject to a variety of factors beyond the normal influence of supply and demand. Political and economic factors are weighing on the minds of both owners and landlords as they consider their next steps. But there remains very strong demand from tenants who are increasingly struggling to find available property to meet their needs, whilst on the sales side, there continues to be a steady stream of committed sellers – those who are moving because they need to – and buyers with the necessary finances to complete a purchase.
Demand for good quality rental property remains strong, with increases in rental values continuing to be seen across all types of property. Houses – family homes – are currently showing the strongest performance, with rental demand pushing up the average prices by around 10% in the last 12 months, with Dorking & Leatherhead now showing a good premium to the average across the South-East.
Download our latest Local Lettings report for Dorking & Leatherhead.
Average prices have continued to increase over the latest 12 month rolling period, with the 1 year (+8%) and 5 year (+17%) change both marginally higher than they were 3 months ago. We have also seen demand hold up well at the very top end of the market, with the largest sale in the last 3 months sitting at £3.9M locally.
Download our latest Local Sales report for Dorking & Leatherhead.
Dorking & Leatherhead remains an attractive place for people to live – something borne out in this article I was asked to contribute to recently for Surrey Live. That demand continues to ensure the local sales & lettings markets remain buoyant with a steady flow of properties coming to market and no shortage of willing buyers and tenants looking to live locally. As ever, there remain some hyper-local factors that influence individuals in different ways.
If you are thinking of moving, or expanding your buy to let portfolio, and concerned about how you will navigate the current market conditions, speak with Graham Faulkner for free advice on the local property market.
Back in 2013, EweMove opened for business and here in Dorking & Leatherhead, we were one of the branches that started trading as part of the launch – on 1st June. Over the last 10 years, we’ve helped hundreds of people buy, sell, let and rent their homes in Dorking, Leatherhead and the surrounding areas. Here are just some of the properties we have helped people move into and out of over the last 10 years…
Other highlights from the last 10 years include:
We couldn’t finish without thanking you all for enduring the endless sheep-based puns, courtesy of our brand ambassador, Ewenice. We think ewe will agree that she is a baa-rilliant role-model for us all!
The government has now formally introduced its Renters Reform Bill to Parliament – the first stage in the process of scrutiny that will ultimately lead to new legislation governing the relationship and rights between landlords and tenants. The headlines have been mostly about the removal of no fault evictions (i.e. the Section 21 notice), but is this draft legislation simply a vote-winning exercise for the Conservatives or is it a much needed revamp of a set of rules that were no longer fit for purpose?
Before we consider the merits of this bill from the perspective of tenants and landlords, let’s have a quick recap of what the Bill includes.
A nuance to the reported plans in many articles is that some of the proposed changes are yet to be formally introduced, and when they are, will need separate legislation to bring them into effect. That does of course mean that we may see a staggered implementation of what is being proposed, with the following changes likely to follow at a later stage:
In reality, most landlords treat their investments as a business, conscious that in the longer term, being focused on a few key things will be in their interests. Namely:
In other words, treat people fairly and you should be OK. And in reality, that is what the Renters (Reform) Bill is seeking to achieve. No reasonable landlord wants to evict a tenant for no good reason – and the Bill allows good reasons to prevail. It also takes away the concept of tenancy agreements that must be regularly reviewed. In reality of course, the regular renewal of tenancy agreements was primarily of benefit to a landlord who felt the rent no longer reflected a fair market rate.
The Bill provides a specific procedure for rent increases, so in that sense, landlords still have a route to achieve what they need. Of course there is now the prospect of an independent tribunal to determine what is fair in the event that an agreement is not reached.
This Bill has a long way to go before it becomes law, but given it would appear to be part of an exercise to make the current government more attractive to voters, we can infer that there will be much political will given to making it law by the time our next general election must take place – January 2025. With multiple stages of review to be undertaken, change to some aspects is inevitable, but in our view, what is proposed probably offers a reasonably fair balance in respecting the rights and interests of both tenants and landlords. We will be watching the progress of the Bill with interest.
At EweMove, we have always been very focused on creating a process for managing tenanted properties that is fair and transparent for all parties involved. If you have any questions about what the reforms might mean for your properties, or would like some guidance on whether to expand or divest your portfolio, please do give Graham a call.
Since I last shared my thoughts on the local market back in Q4 2022, there has been little good news for the economy and rising interest rates have grabbed many headlines for the housing market. That said, for those transactions that have completed, average sales prices have remained pretty steady, but the number of transactions is declining. In other words, how you market your property and vetting the ability of a buyer to complete the transaction have never been more important for those looking to sell.
For Landlords, the picture is somewhat better, albeit tempered by a political landscape that sees the sector as an easy target. New regulations and financial restrictions are off-set by the continuing rise in rental income and the opportunities to add to portfolios at attractive prices.
People move for many reasons – emotion and desire are often portrayed in the media as the primary reason, with the dream of home ownership a long-standing narrative in the press. The reality is that the vast majority of transactions are driven by need. Births, deaths, marriage, divorce and work have long been the main drivers of movement in our property market and none of these are changing fundamentally. What we are seeing is much more delay in the transaction process and more chains struggling to complete.
Like so many other things in life, supply and demand plays a big part in value in the housing market and the shortage of family homes continues to make houses far more attractive than flats. In the last 12 months to December 2022 (the latest available data) flats have barely changed in average sales price, whilst houses have increased by 10.8%. The property portals are all now signalling a levelling off in asking prices and the reality is that there will be much more variation in sales prices as the balance of power shifts from seller to buyer.
There is never a simple answer to this question and it really will depend on your own circumstances and motivations. For many, buying a house is contingent on mortgage funding and the news on that front has been ‘difficult’ to say the least for some time. But in recent weeks, there have been some flickers of more positive news as the major lenders start to look beyond the current period of high interest rates and seek to balance their books for the longer term. Longer term fixed mortgages have certainly started to get more affordable again.
So, for those with the finances to move, it may well be a good time to buy.
| Property type | Average sales price | Average Rental |
|---|---|---|
| Average sales price overall: | £512,554 (+7.5%) | £1,425 (+4%) |
| – Flat / apartment | £265,769 | £1,254 |
| – Terraced house | £454,472 | £1,258 |
| – Semi-detached | £553,748 | £1,858 |
| – House | £947,591 | £1,674 |
| Total transactions | 818 (-35%) | – |
Our summary of the data:
Why not download our latest sales and lettings report and take a look at some of the numbers in a bit more detail.
We’ve written a whole book on that – if you would like a copy of “The 39 Steps to Avoid A House Sale Nightmare”, just email us using the link below and ask us for one.
The current economic and political outlook is certainly weighing heavily on the property market for buyers, sellers, landlords and tenants. The times when buying property could be considered a guaranteed investment are a distant memory. Whether you are looking to sell and downsize, move to create more space for a family, or buy to let, it has never been more important to take the time to clearly think through your objectives and the financial consequences of those.
If you are thinking of moving, or expanding your buy to let portfolio, and concerned about how you will navigate the current market conditions, speak with Graham Faulkner for free advice on the local property market.
The last year has hardly been good news for homeowners, but for landlords, the picture is slightly different.
Continued strong demand from tenants is keeping rental levels up and for those with capital to invest, there are some good opportunities to add to portfolios at prices that could generate good yields.
The main issue that is driving opportunity for landlords is the reduction in sales transactions that are reaching completion. It is mainly a factor of nervous buyers and the reduced affordability of mortgages. Many sellers need to move though, and if prices are falling, they can factor that into the property they are buying. That puts landlords with capital in a strong buying position. Sellers agents will know that as an investor, you are much more likely to complete a chain and ensure a successful completion, making you an attractive buyer. That gives you a strong negotiating position. But we’re not looking at how to negotiate here, we’re looking at the impact of a slight difference in price on long term yields. The price you pay doesn’t affect the actual monthly rental income you can command, but it does have an impact on your yield.
The two examples below both use area wide average figures from Dorking & Leatherhead. As ever, this is much local variation in terms of style, type and demand for properties.
| 2 Bedroom Flat | |
|---|---|
| Average rental value | £1,282 |
| Average sales price | £291,612 |
| Yield | 5.28% |
| Average sales price -10% | £262,450 |
| Yield | 5.86% |
| 2 Bedroom House | |
|---|---|
| Average rental value | £1,453 |
| Average sales price | £420,870 |
| Yield | 4.14% |
| Average sales price -10% | £378,783 |
| Yield | 4.6% |
(All data is the average for the period February 2022 to January 2023.)
Where the difference kicks in is the potential increase in value over the longer term. We don’t have a crystal ball, but over the last 20 years, the increase in value of houses has consistently exceeded those of flats by a significant margin for every timeframe. Let’s use those historic figures to see what the impact would be.
| Flat | House | |
|---|---|---|
| Starting value | £262,450 | £378,783 |
| 1 year on | +0.2% (£262,975) | +10.8% (£419,692) |
| 5 years on | +2.5% (£269,011) | +20.4% (£456,055) |
| 10 years on | +40.7% (£369,267) | +62.5% (£615,522) |
| 20 years on | +97.9% (£519,389) | +152.8% (£957,563) |
To summarise those numbers, the total of income and increased capital value at 20 years would be:
The 2 bedroom flat only required 69% of capital compared to that required to buy the 2 bedroom house, but it only generated 61% of overall outcome.
If we convert those numbers to an equivalent annual yield, then the flat works out to around 5.7% but the house works out at around 6.2%. The short term yield is slightly lower, but the long-term outcome is much better.
We have used a 10% reduction in sales price as an example of what might be achieved. There are many reasons why sellers may agree to a reduction in price and the key to achieving a good outcome is identifying those sellers that may be willing to negotiate on price. As a landlord, your wish list for a property may be a little different. Changes to legislation on things like energy performance mean that more modern properties may make more sense – buyers are often drawn to period properties for their aesthetic appeal, but that is less of a consideration for you. Consider which properties may not be attracting the attention of buyers.
As local estate agents, we pay close attention to all of the properties for sale across Dorking & Leatherhead. We know which properties have been on the market for a considerable period of time and we are able to identify those that may be over-priced, open to negotiation to secure a quick sale, or generally not likely to be attracting the attention of buyers.
The current market certainly presents opportunities for landlords to consolidate their portfolios and ensure they are driving rental yields that exceed the return on capital available in traditional bank accounts. There is certainly scope to secure some very good deals on individual properties, if you know where to look. Why not let us guide you through the process of expanding your buy to let portfolio and help you maximise your long-term returns.
Talk to Graham Faulkner for more advice on expanding your portfolio.
Sheep and cats may not be obvious bedfellows, but here at Ewenice Towers in Dorking & Leatherhead we think our furry friends aren’t just good for our own well-being, they can also make financial sense for landlords.
As with so much of being a landlord these days, there are two elements to getting it right – understanding what the law says (and this may well be changing soon anyway) and the way you communicate with and manage your tenants. That change in the law has already appeared in the draft Renters Reform Bill making its way through Parliament and there is strong advocacy for it from both the Dogs Trust and Cats Protection pushing hard for a better deal for our family pets. The Dogs Trust have a great resource for landlords and tenants – www.letswithpets.org.uk – a website packed full of advice for tenants and landlords.
One of their key messages:
“By accepting tenants with pets you can increase demand for your properties and attract long-term, responsible tenants.”
In their report “Purrfect Landlords: A Guide”, Cats Protection look at the difference between landlord perceptions and reality with pets. One point stands out – 62% of landlords worry about damage to property, contents or the garden, but only 17% have ever experienced any such issue. And of course, such damage is almost always addressed by the tenant or covered by insurance.
As a landlord, hearing that message come from an organisation with a vested interest, you may be skeptical. But we firmly believe there is a lot of logic in their viewpoint. Let’s come back to those two elements and consider it purely from a landlord’s perspective.
Right now, you are perfectly within your rights to accept or refuse a pet in any property you make available to rent. The Model Tenancy Agreement was updated in 2021 to remove the blanket ban on pets from the standard contract, but there is no obligation to use that contract. Our policy at EweMove is to adopt a common sense approach to pets, working with our landlords. We use a ‘pet policy’ which clearly sets out what is – and is not – agreed and the obligations of the tenant to be a responsible pet owner. The Renters Reform Bill currently proposes a slight move to a position of giving tenants a right to request a pet in the property, which a landlord could not unreasonably refuse. We suspect belligerent landlords wouldn’t find it too difficult to concoct a ‘reasonable’ excuse to decline the request.
In short, the law does not currently offer tenants much comfort and we doubt the proposed changes will significantly alter the landscape for pet owners.
This is where we think there is a real opportunity for pet-savvy landlords to stand out from the crowd. According to the Dogs Trust, around 40% of UK households own pets. Of course some pets are far better house trained than others, but by and large, pet owners are responsible individuals who care deeply for their furry friends. And with far fewer properties allowing pets, a little thought may turn a pet-loving tenant into a good financial decision.
Here are a few tips to consider:
As we reach the ‘tail-end’ of this article, our final observation is that tenants with pets are much more likely to stay longer-term and be happier generally. That must be good for landlords.
We are certainly asked on a regular basis about properties that allow pets, so why not tap into this growing sector and turn it to your advantage. For more advice on letting your property to a tenant with a pet, give Graham a call.
EweMove Dorking & Leatherhead 