Residential Property Review – July 2024

A new Labour government – what next for housing?  

Following the Labour Party’s landslide election win, what changes might be in store for the UK housing market?  

In the Prime Minister’s introduction to the King’s Speech on 17 July, Sir Keir Starmer stated “Too many people currently live with the threat of insecurity and injustice, and so we will make sure everyone can grow up in the secure housing they deserve. We will introduce tough new protections for renters, end no-fault evictions and raise standards to make sure homes are safe for people to live in.”  

Several key Bills relevant to the housing market were announced:  

  • Renters’ Rights Bill – rent caps and longer-term tenancy agreements to stabilise the rental market  
  • Planning and Infrastructure Bill – simplified planning procedures and infrastructure funding  
  • Draft Leasehold and Commonhold Reform Bill – abolishment of ground rent and simplification of leasehold extensions and freehold purchases. 

Housing market update 

Completions and house prices rose in June, but buyer activity fell as the nation awaits a cut in Bank Rate.  

The start of 2024 saw a boost in sales agreed, resulting in positive effects being seen in June, with the highest number of completed transactions since March 2023, according to HMRC.  

However, a slight decline in mortgage approvals and sales agreed indicate that buyer activity has waned halfway through 2024. Savills report that supply of homes has continued to increase, thus widening the gap between supply and demand. Buyer confidence should be restored once mortgage affordability improves and is dependent on Bank Rate reducing, which Oxford Economics predict will happen in August.  

UK annual rental growth fell to 5.8% in May according to Zoopla – down on the 6.6% recorded in April. Commuter belt regions continue to show the strongest growth, particularly in the north of England. 

BTL landlords intend to raise rents 

Many buy-to-let (BTL) landlords plan to raise their rents within the next year, according to a survey by Landbay.  

Nearly 85% of respondents intend to increase rents over the next 12 months, with 37% of this group planning to put rents up by between 6% and 10%. Meanwhile, 36% said they would raise rents by up to 5% and a further 8% of BTL landlords will put them up by between 11% and 19%. The reasons cited for the increases included higher interest rates and increased operating costs.  

According to the survey, half of the landlords raising rents self-manage their properties, 27% use an estate agent and a fifth rely on a professional management company. The survey also found that 42% of landlords have between four and ten properties, while 28% own at least 20 rental properties.  

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission. 

All details are correct at the time of writing (18 July 2024) 

News in Review

“We need to go further and faster if we are to fix the foundations of our economy” 

Last week, Chancellor Rachel Reeves announced the launch of a National Wealth Fund (NWF), which has been created to increase investment in the UK. A key Labour manifesto promise, the Chancellor pledged £7.3bn of state funding to “unlock investment” in UK growth industries. 

The funding will be allocated through the UK Infrastructure Bank, alongside existing monies, while the British Business Bank will be reformed to help initiate institutional capital in the UK. British Business Bank Chief Executive, Louis Taylor, said, “We expect the fund to create a single coherent governmental offer for businesses and a compelling proposition for investors that will help mobilise billions.”  

A NWF task force has been assembled, the inaugural meeting of which was attended last week by Ms Reeves, Energy Secretary Ed Miliband and former Bank of England Governor Mark Carney. Further details on the fund will be outlined ahead of a global investment summit later in the year. The new government intends to legislate to make the fund a permanent institution. 

At the meeting, the Chancellor commented, “This new government is getting on with the job of delivering economic growth. I have been clear that there is no time to waste… We need to go further and faster if we are to fix the foundations of our economy to rebuild Britain and make every part of our country better off… Britain is open for business – and the work of change has begun.” 

GDP uptick 

Recently released growth figures have shown the UK economy grew by 0.4% in May, following a flat reading the previous month. The data from the Office for National Statistics (ONS) highlights a rebound in the service sector as a key contributor, growing by 1.1% in the three months to May, the strongest three-monthly growth rate since December 2021. Growth in the sector was widespread, with output increasing in 10 of the 14 sub-sectors. 

Exceeding expectations from a poll of economists of 0.2% growth for the month, sterling rose on the news last Thursday, to reach its highest level against the US dollar since early March. 

Housing activity 

The new UK Residential Survey from the Royal Institution of Chartered Surveyors (RICS) has shown optimism in the housing market has reached ‘the highest level since January 2022,’ on the back of the General Election. Over the next quarter, the RICS survey highlighted 20% of respondents are expecting a recovery in residential sales, the highest figure since January 2022. The survey states, ‘The outlook does appear to be brightening somewhat, with near-term sales expectations improving noticeably.’ This can be partly attributed to confidence in the newly elected government, which has committed to deliver 1.5 million homes over the next five years. 

A net balance of +54 survey respondents anticipate house prices will continue their ascent over the next year. New buyer enquiries show a net balance reading of -7% in June, signaling a ‘modest weakening’ in demand, the third consecutive month in which enquiries have slowed. 

Senior Economist at RICS, Tarrant Parsons spoke of potential improvements in the sector, “There are some factors emerging now that could support a recovery in the months ahead. If the Bank of England does decide that the current inflation backdrop is benign enough to start loosening monetary policy next month, this may prompt a further softening in lending rates. In addition, the recent election delivered a clear outcome, with housing pushed up the political agenda.” 

Euros boost the economy 

Although the result didn’t go in England’s favour on Sunday, there is some good news for the economy, with expectations of a £3.1bn economic boost over the last month as Euros excitement gripped the nation. Before the final, those preparing to watch the match spent an estimated £405m, with an estimated £280.1m spent in supermarkets alone, as viewers stocked up on last-minute food and drink. Over the weekend, Tesco predicted selling over one million pizzas, 180,000 packs of burgers and four million packs of beer. Pubs and bars estimate a £120m revenue boost with fans turning out to cheer on the Three Lions. 

Here to help 

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have. 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. 

All details are correct at time of writing (17 July 2024) 

Off on holiday? Leave your home fully insured

Are you looking forward to a long holiday this summer? Don’t spoil the fun and relaxation; make sure you leave your home fully insured. 

Inform your insurance provider 

You may think that it doesn’t make a difference whether you go on holiday for two weeks, a month, or more. However, most insurers require you to notify them if your primary home will be vacant for at least 30 days. In this instance, it is likely you will need to take out an extra layer of cover called unoccupied property insurance. Failing to do so may invalidate your policy, leaving you and your home unprotected. 

Proceed (and post) with caution 

We understand the desire to share snaps of your holiday on social media. Before you do so, be mindful that insurers expect you to take reasonable care to ensure the safety and security of your home. Since live holiday updates show people that your home is probably unoccupied, you could be putting your home and its insurance at risk. 

Safety tips 

With burglaries more common during the summer months, here are a few ideas for keeping your home secure: 

  • Lock all windows, doors and gates 
  • Save the holiday posts until you return home 
  • Ask a neighbour to put your bins away after they are collected 
  • Cancel any deliveries so they don’t pile up 
  • Leave keys with someone you trust; to make the house seem occupied, they could turn lights on/ off, close the curtains, remove post from the letterbox, or use your driveway. 

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments 

Wealth in the news

Are you a magpie investor? 

Almost one in ten (9%) adults are. These so-called magpie investors buy luxury items hoping for an increase in value and an attractive return, according to new research1. The assets invested in include jewellery, watches, collectibles, classic cars, art, wine, whisky, and accessories such as clothes and handbags. Magpie investors favour jewellery most, with almost half (46%) saying they’ve invested in jewellery in the hope it will increase in value. Wise investors insure their valuable items. 

Record inflows to equities 

There was a record surge of interest in equity funds in the weeks leading up to the end of the tax year. According to a recent fund flow index, 2024’s ISA season was the best in the 10 years the index has produced its data. The index2 recorded inflows from the middle of February to the end of the tax year, revealing that equity funds absorbed £5.17bn, representing more than five times as much as during the same period in 2023 (£981m). 

1Investec, 2024, 2Calastone, 2024 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. The Financial Conduct Authority (FCA) does not regulate Will writing, tax and trust advice and certain forms of estate planning. 

News in Review

“We need to move forward together” 

After a historic landslide victory for the Labour Party, Sir Keir Starmer became the seventh Labour Prime Minister on Friday. Securing a massive 412 seats, the incoming Prime Minister spoke outside 10 Downing Street for the first time, declaring “Our country has voted decisively for change, for national renewal and the return of politics to public service.” 

Acknowledging the challenges ahead and the fractured vote that delivered Labour its biggest parliamentary majority in decades, Mr Starmer said, “We need to move forward together.” He cautioned that changing a country is “not like flicking a switch… This will take a while but have no doubt that the work of change begins immediately.” 

The Conservative Party sustained huge losses, securing a total of 121 seats, a loss of 251. While Rishi Sunak retained his seat in Richmond and Northallerton in Yorkshire; a number of senior Conservative MPs lost their seats including former Prime Minister Liz Truss, Defence Secretary Grant Shapps, Leader of the House Penny Mordaunt and Jacob Rees-Mogg. The party lost all of their seats in Wales. On departing Downing Street, the outgoing Prime Minister apologised after leading the Conservatives to their worst ever election result. Mr Sunak said he would quit as party leader once arrangements are made to choose his successor. 

Liberal Democrat leader Sir Ed Davey said the results were “exceptional” as the party won the highest number of seats ever. Despite the exit poll suggesting the party would secure 61 seats, they ended up with 71, an increase of 64 seats. Reform UK leader Nigel Farage was voted an MP for the first time after eight attempts, his party secured five seats. The Green Party had a good result, winning four seats. Carla Denyer, Green Party Co-leader said that Bristol had “made history” by electing her as the city’s first Green MP. 

Scottish National Party (SNP) leader John Swinney described the General Election result as “very, very difficult and damaging” for the party, who secured just nine seats, greatly diminishing the chances of an independence referendum. 

The first July General Election since 1945, low voter turnout appeared to reflect disillusionment among the electorate, coming in below 60% – the lowest in over 20 years. 

Straight to work 

Keir Starmer got straight to work appointing 22 Labour MPs and peers to key cabinet positions. As expected, Angela Rayner was appointed Deputy Prime Minister, while Rachel Reeves will be moving into 11 Downing Street as Chancellor. The incoming Chancellor previously confirmed Labour would not hold a Budget without an independent forecast by the Office for Budget Responsibility (OBR) which require ten weeks’ notice to prepare. 

Other key appointments include David Lammy (Foreign Secretary), Yvette Cooper (Home Secretary), John Healey (Defence Secretary), Bridget Phillipson (Education Secretary) and Wes Streeting (Health Secretary). 

As the new cabinet began activating its vision for change, the 58th Prime Minister spoke with world leaders, who congratulated him on his appointment. In his first few days in power, Mr. Starmer said “work has already begun” to improve relationships with the EU and he met John Swinney, the First Minister of Scotland, in Edinburgh in a bid to “reset” the relationship between the Scottish and UK government. 

A busy start to the week  

On Monday morning, Chancellor Rachel Reeves laid out Labour’s economic agenda, including: 

  • Bringing back compulsory housebuilding targets to achieve its goal of 1.5 million new homes in England over the next five years 
  • Scrapping the “absurd” ban on new onshore wind in England 
  • Decisions on large projects will be taken nationally, rather than locally 
  • Setting a date for the Autumn Budget before the summer recess 
  • Deputy Prime Minister Angela Rayner will write to local councils and planning authorities to review green belt boundaries. 

In other news 

Released on Friday, the latest Halifax House Price Index shows that average house prices were largely flat in June, down by -0.2% on a monthly basis, while the annual rate of house price growth was unchanged from last month at +1.6%.  Amanda Bryden, Head of Mortgages at Halifax said, “For now, it’s the shortage of available properties, rather than demand from buyers, that continues to underpin higher prices.” 

Here to help 

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have. 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. 

All details are correct at time of writing (10 July 2024) 

“Take time to check your money – and your future – is protected”

Football presenter Jeff Stelling has warned people to be on the ball and check their pension protection in a new campaign by the Financial Services Compensation Scheme (FSCS). 

Every year, the FSCS receives thousands of claims from people who have lost money from their pensions when their financial providers have gone out of business. The FSCS is the authorised body which provides compensation when a financial company fails. To raise awareness of the risks, Stelling starred in a new campaign urging people to check they have FSCS pension protection. 

Your retirement goals 

The decisions you make during your working life will impact the type of retirement you will have, the campaign spells out. One easy action you can take now is to ensure your pension pot is protected by FSCS. 

In the last five years, more than 43,000 claims were made to FSCS relating to pension losses – totalling almost £2bn. 

“One day – not just yet – I know I will retire,” Jeff says in the campaign. When that time comes, you don’t want to be left unprotected because you never got round to checking. 

Two minutes of your time 

So, how can you be sure your money is protected? “All you need to do is to search FSCS and head to their Pensions Protection Checker Tool,” Stelling says. You could do this at half-time, he suggests. Check here www.fscs.org.uk/check/pension-protection-checker. Please contact us with any questions on your pension. 

Brighter outlook for global economy as inflation eases

At times in the past two years, it seemed to some that inflation would never come down. Double-digit inflation became routine. Now, with price rises back near normal levels, optimism is returning to financial markets. 

Disinflation diaries 

Inflation has fallen well below the multi-decade highs witnessed in many countries since 2022. In response, central banks around the world now look set to ease monetary policy in the coming months. 

Indeed, some central banks, including those in emerging markets, have already started cutting rates. In recent months, policymakers in Mexico, Brazil, the Czechia, Hungary and Colombia have started, or increased, easing efforts. 

The ‘last mile’ 

As developed countries bring monetary policy back towards more normal levels, some analysts are talking about the ‘last mile’ for disinflation. 

Certainly, after a long period of high inflation, falling inflation rates are a welcome relief for many. In the UK, inflation has eased significantly from the 41-year-high of 11.1% recorded in October 2022. 

For all this optimism, however, there are some warnings that the final stretch will not be a stroll in the park. 

Bumps in the road 

In Australia, consumer price inflation rose to a five-month high in April, a figure that surprised analysts. The uptick was blamed on increases in petrol, health and holiday costs. 

Meanwhile, the International Monetary Fund (IMF) has released a Global Financial Stability Report warning that geopolitical tensions, strains in commercial real estate and debt vulnerabilities all remain acute risks for the global economy in the months and years ahead. The IMF pointed to recent evidence that disinflation may have stalled in some countries, suggesting that inflation may be persistent in some sectors. 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. The Financial Conduct Authority (FCA) does not regulate Will writing, tax and trust advice and certain forms of estate planning. 

UK dividends – positive news 

Dividend investors have been rewarded so far in 2024, with payouts from UK shares rising by 4.9% in the first three months of the year compared with the same period in 20231. 

The data tracks dividend payouts from 900 UK companies and comes as good news for income seekers. Computershare upgraded their headline forecast from £93.9bn to £94.5bn in total payouts for 2024 – a 4.3% year-on-year increase versus the previous forecast of 3.7%. 

Most of this is likely to be driven by special dividends, which are expected to be significantly larger than in 2023. Regular dividends are predicted to be worth £89.5bn, up 1.5% year-on-year, down from 2% last year. 

What about share prices? 

While dividends rose, so did share prices. As a result, prospective yields on UK equities are around the same as a year ago at 4% on average. 

The fastest dividend growth rates so far this year have been in the airline, leisure and travel sectors, which continue to recover from the pandemic. However, according to the report, banks are likely to make the largest contribution to dividend growth in the UK for the third year running. 

1Computershare Dividend Monitor, 2024 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. 

News in Review

“With consumer demand on shaky ground, an incoming government can help business by ensuring that the UK is the most attractive place to start, grow and run a business” 

New retail data from the Confederation of British Industry (CBI) has highlighted a softening in retail sales in June, with a similar expectation for July, as “unseasonably cold weather” impacted, while “internet retail sales fell sharply too,” according to Interim Deputy Chief Economist at the CBI, Alpesh Paleja. Measuring volumes year-on-year, the CBI’s monthly retail sales balance fell to -24 in June from +8 in May. Expected sales for July indicate a reading of -9. 

Internet sales fell at a much faster pace than expected in the year to June (-45% from -6% in May). They are expected to fall again in July by -5% (year-on-year). Retailers are experiencing a reduction in orders (-14% in June from -11% in May), with expectations of a continuation in July (-16%).   

Speaking about improving consumer fundamentals, Paleja added, “With inflation now at the Bank of England’s target and real incomes rising… it is clear that households are still struggling with the legacies of the cost-of-living crisis, with the level of process still historically high in some areas. With consumer demand on shaky ground, an incoming government can help business by ensuring that the UK is the most attractive place to start, grow and run a business. This will require bold action such as delivering a holistic cross-economy solution to the UK’s overly complex business rates system, which is a particular burden for retailers. This would help to alleviate the burden of higher costs.” 

Uptick in quarterly GDP 

New UK growth data from the Office for National Statistics (ONS) shows that real gross domestic product (GDP) increased by 0.7% in the three months to April 2024, exceeding estimates of 0.6%. 

From a monthly perspective, GDP is estimated to have shown no growth during the month of April, following growth of 0.4% in March. 

The quarterly growth improvement was largely attributable to the services sector, which expanded by 0.8% in the quarter, with slightly stronger activity in the professional services, storage and transport sectors. 

Car manufacturing 

The latest UK car manufacturing statistics from the Society of Motor Manufacturers and Traders (SMMT) show a decline in units produced by 11.9% in May to 69,652 as factories prioritise ‘retooling for an electric future’. Nearly two fifths of all output in the month was attributed to electrified vehicles (battery electric, plug-in hybrid and hybrid). The SMMT expect this share to continue to grow ‘as manufacturers invest in greener product lines and technology to deliver Britain’s net zero ambitions. As countries around the world continue to compete for such investment in their own industries, the UK must do all it can to position itself ahead of the competition.’ 

Election news 

The last few days of campaigning have become more heated as parties put their case to the electorate. The ‘Gamblegate’ betting controversy has rumbled on as the number of election candidates placing bets on the timing and outcome of the election elevates.  

Rishi Sunak and Keir Starmer took part in a final televised debate before the election last week, answering audience questions on immigration, tax, Brexit, welfare and protecting women-only spaces. The Prime Minister went on the offensive, cautioning over Labour’s tax plans. In a plea to the public he professed, “If you’re not certain about Labour, don’t surrender to them.” Mr Starmer countered that Conservatives were planning “unfunded tax cuts” and people were “paying hundreds of pounds more because of the damage done to the economy.”  

With polls continuing to show a robust labour majority, a report from the Centre for Social Justice entitled ‘Breadline Britain’s Election Battleground,’ said Labour was ‘overwhelmingly’ the most popular party among Britain’s poorest people, with half of those polled supporting them in the election, an increase of 14% on 2019 data. Conservative support has tailed off from 23% in 2019 to just 15%, while 40% of the nation’s poorest voters saw the Conservatives as ‘out of touch,’ up 6% from 2019. 

Here to help 

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have. 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. 

All details are correct at time of writing (3 July 2024) 

Become mortgage-ready this summer

Do you have hopes to buy? Whether you’re looking to get on, move up or down the ladder, your property dreams are possible with a little preparation. Here’s how you can get yourself mortgage-ready this summer. 

Check your credit score 

Lenders will inspect your credit report for evidence that you can meet the mortgage repayments. Check your records for free now so you have time to make any improvements. No matter where you are today, there is always an opportunity to boost your score. 

Consistency is key 

Mortgage lenders are looking for signs that you are responsible, so paying your bills on time is a great way of boosting your credibility. Any indication that you could go into debt may put off a lender, so be mindful of your outgoings, especially in the months running up to your application. 

Go through old accounts 

Consider how any inactive accounts might affect your application. It is advisable to close accounts that are out of date – particularly joint accounts with people you are no longer financially linked to. 

Register to vote 

Being on the electoral roll serves as proof of your identity and address. 

Maximise your deposit 

With high loan-to-value (LTV) mortgages available, it can be tempting to place the smallest possible deposit on a property. However, this will cost you more in the long run as your monthly repayments will be higher. Do your future-self a favour and put down any extra cash that you can. 

Seek advice 

You don’t need to navigate the mortgage market on your own. We can find options that you might not have access to, advise on schemes that could help, and assist you with the application process. 

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments