UK Property Boom Continues As House Prices Soar By 10.9% And Sales Forecast To Rise To The Highest Level Since The 2007 Market Peak

Wow! During the worst recession on record, British house prices jumped by an annual 10.9%, the most in almost seven years, and they look set to rise further as people search new homes after the pandemic, one of the country’s largest mortgage lender the Nationwide said.

Almost 70% homeowners considering a move said they would still go ahead even without the unlikely extension of a tax incentive by Chancellor Rishi Sunak, Nationwide said, according to a survey it conducted in late April.

The latest figures demonstrate the scale of the surge in house prices which hit a new record high at an average of £242,832, according to Nationwide, which whilst not the official Land Registry data is widely respected by the industry.

Nationwide added that house prices were 1.8% higher than in April.

Nationwide said there was scope for annual house price growth to accelerate further in the coming months, given how weak the housing market was in early stages of the pandemic.

However, if unemployment rises sharply later in 2021 - when Sunak's jobs protection programme is due to expire - there was scope for activity to slow, perhaps sharply, it said.

Official data from the Office for National Statistics has shown that house prices in March jumped by just over 10%, the largest annual rise by that measure in nearly 14 years – prior to the 2007 peak and later property and stock market crash.

Not all areas are booming and parts of London are seeing sharp price reductions on flats.

Coastal hotspots - in Devon, Cornwall and Dorset - have seen house prices rise by as much as 48% in a year as people ‘escape to the country’!

One million Britons fear losing homes when eviction ban ends - as up to 400,000 tenants have already been served notice or told to expect it due to unpaid rent over pandemic, The Daily Mail reports.

The tenant eviction ban expired on 1 June, which could see thousands of people with rent arrears evicted by bailiffs.

·        Ban lifted meaning bailiff-enforced evictions can take place from now

·        Government introduced ban to support renters through the pandemic 

·        Charity says that 400,000 renters have already been served with eviction notice

·        A further 450,000 households are in rent arrears according to research

The Joseph Rowntree Foundation said 400,000 have already been served with an eviction notice or told they may be evicted and a further 450,000 households are in arrears with rent, JRF said. 

In practice, possession claims leading to eventual eviction could take 6-12 months to go get through the county court system, which is already overloaded with all manner of legal cases.

Over 60% of buy-to-let landlords own just one property and many of whom are paying mortgages with little or no chance of recovering thousands of pounds of rent arrears built up during the lockdown.

Other news

The UK is likely to further restrict overseas travel taking Portugal OFF the ‘green list’

Apple wants staff back in the office by September.

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Property renters desert London as rents continues to fall

The NRLA reports that private sector tenants are leaving London in response to the COVID-19 pandemic.

According to new research, landlords renting properties in London were the only ones in the country to report that tenant demand had fallen more than it increased.

A survey of National Residential Landlords Association members, conducted by the research consultancy BVA-BDRC, found that 56 per of landlords with properties in Central London saw tenant demand fall in the first quarter of 2021 compared to the same period in 2020. Just 12 per cent reported that demand had increased.

In Outer London, 45 per cent of landlords reported demand having fallen, with 33 per cent saying it had increased.

Tenant demand was strongest in Wales, with 57 per cent of landlords renting property there having reported an increase over the same period, compared to just two per cent who registered a fall in demand. This was followed by landlords renting property in the South West, where 53 per cent reported an increase in demand, compared to 13 per cent who registered a fall. 

Overall, across England and Wales, 31 per cent of landlords reported tenant demand for properties had increased in the first quarter of 2021. This has recovered from the 14 per cent of landlords who reported tenant demand having increased in the second quarter of 2020 in the aftermath of the first lockdown.  

Nationally, whilst seven per cent of landlords had brought property in the first three months, the same proportion had sold property.

Central and Outer London continue to be the only regions where a significant proportion of landlords reported that rents are falling (46 per cent and 27 per cent respectively).  Landlords with property in London were also more likely to have reduced rents across their own portfolio in 2020 (46 per cent reduced them in Central London, 26 per cent who reduced them in Outer London).

Across the country, 32 per cent of landlords had experience of properties being void in the first quarter of 2021, with the average void period being 102 days.

Ben Beadle, Chief Executive of the National Residential Landlords Association said:

“The pandemic has seen a significant shift in where tenants want to rent, with the trend towards home working making inner cities, especially London, far less desirable.

“This poses significant challenges in determining where to invest to meet demand. Investors will no doubt be waiting for the market to settle, and the full roadmap out of lockdown to be realised, before making major decisions about where to invest. This will be particularly important as employers make decisions in the coming months about future working patterns.”
Rhianna Abrey 10 May 2021 

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Property News - Changes to notice periods and tenant evictions - 1st June

UK domestic property renters will continue to receive support for longer notice periods until at least the end of October. Notice periods that were extended as a result of the covid crisis are gradually being reduced. The minimum for every case now is 6 months. (Section 21s and Section 8s). Unless there is an extreme case, such as domestic abuse, anti-social behaviour, or rent arrears.  

Main changes:  

·        Section 21 (Form 6a) 

From 1st June the minimum notice period on Section 21 (Form 6a) will be reduced to 4 months.  

·        Section 8 (Form 3) 

From 1st June notices that currently 6 months will be reduced to at least 4 months. For arrears which are 4 months or more will require a 4-week notice period. Serious cases as shown below will be reduced to the following:  

·        Anti-social behaviour - Immediate to 4 weeks’ notice

·        Domestic abuse in the social sector - 2 to 4 weeks’ notice

·        False statement - 2 to 4 weeks’ notice

·        Over 4 months’ accumulated rent arrears - 4 weeks’ notice

·        Breach of immigration rules/right to rent - 2 weeks’ notice

·        Death of a tenant - 2 months’ notice

EVICTIONS  

From 1st August - Notice periods for cases where rent arrears are 4 months or more will be reduced to 2 months arrears which are 4 months or more will require a 4-week notice period. 

The ban on bailiff-forced evictions will be lifted on 31st May 2021. The notice period before evictions take place will be 14 days unless it is an extreme occasion.  

Bailiffs will be asked to not carry out an eviction if they have been told that someone in the property is self-isolating or showing signs of COVID-19. 

 Notice periods will return to pre-pandemic levels from 1st October, Subject to public health advice and progress with the Government’s roadmap. 

 The government has announced that a White Paper will be published with the aim to create a fairer private rented sector that will benefit both the tenants and the landlords. This will also include proposals for the abolition of section 21 ‘no-fault evictions to give tenants more security and a new ‘lifetime deposit’ to ease the burden when moving property. 

There is a belief that in the next few months when furloughing finally stops that around a million people will be unemployed and this could have a dent on the market. 

According to the Citizens Advice Bureau, over half a million tenants were in arrears three months ago and this has certainly increased in the last quarter. This represents approximately 12% of all tenancies are now in default. 

However, the current property market is very strong, with the new 5% deposits for first-time buyers really helping to lead so many people looking to get on the property ladder. Bournemouth based property agents Martin and Co have seen the rental market appreciate by almost 10% in the last 6 months and the housing market has been around the same. 

They said: “A surprising factor has been so many new first-time investors looking for a property, as they believe this is the way forward with interest rates so low and the uncertainty of long-term pensions”. Source: Martin and Co, Bournemouth. 

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Landlord Tenant Eviction Ban Extended

In yet another blow for buy-to-let landlords with tenants not paying their rent, the UK government has announced another extension to the current ban on bailiff-enforced evictions in England until May 31.

From June the ban will “taper” off, leaving landlords confused since no details have been released on exactly how this will take effect.

Housing Secretary Robert Jenrick said: “The government will consider the best approach to move away from emergency protections from the beginning of June, taking into account public health advice and the wider roadmap."

Ben Beadle, chief executive of the National Residential Landlords Association, said: “The further extension to the repossessions ban will do nothing to help those landlords and tenants financially hit due to the pandemic. 

“Given the cross-sector consensus for the need to address the rent debt crisis, it suggests the government are unwilling to listen to the voices of those most affected.

“If the Chancellor wants to avoid causing a homelessness crisis, he must develop an urgent financial package including interest free, government guaranteed loans to help tenants in arrears to pay off rent debts built since March 2020.  

“This is vital for those who do not qualify for benefit support. Without this, more tenants face losing their homes, and many will carry damaged credit scores, making it more difficult to rent in the future and causing huge pressure on local authorities when they can least manage it.”

The announcement today means that until the 31st May private landlords will need to continue giving tenants six months’ notice before they can repossess properties, except in the following circumstances:

·        Anti-social behaviour (four weeks’ notice)

·        False statements provided by the tenant (two to four weeks’ notice)

·        Over 6 months’ accumulated rent arrears (four weeks’ notice)

·        Breach of immigration rules under the ‘Right to Rent’ policy (three months’ notice).

The courts already have a huge backlog of cases to clear, which means actually gaining possession of a property following legal and enforcement action could take considerably longer than six months.

Buy-to-let landlords have been hit with a raft of punitive tax measures and are unlikely to win any public sympathy.

In this month’s budget, the Chancellor introduced plans to hike corporation tax 25% over the next few years, which will affect property investors holding their assets within limited companies.

Over 5 million people will be higher rate taxpayers due to the freezing of allowances.

In short, people in UK will be living in one of the highest tax paying countries in the world.

The continued eviction ban will not help the millions of property investor landlords running small businesses with mortgages, trying to build up a pension or supplement their income in retirement.

With the country is facing a pensions timebomb, people who take the initiative to provide for their own retirement should be encouraged with tax breaks.

Will property prices crash in 2021?

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