With only a couple of weeks to go before the EU Referendum vote I was expecting a gradual decline in sales market activity. We traditionally see such a downturn when there is a General Election and the press are certainly not treating the EU Referendum any differently. I can’t say potential buyers in north Leeds are showing the same interest. My negotiators have agreed a number of sales in the last week and we’ve a number of offers on other properties that we’re in the middle of negotiating. From this level of activity it would appear the majority of prospective buyers are of the same opinion as me; if the Remain camp wins demand for housing in Leeds will only get stronger as the population grows and with new-build housing failing to keep pace with demand. If the Brexit supporters come out on top the economy may have a little wobble, but it will take years for any significant impact to be felt in the housing market due to the current levels of demand. Cities such as Leeds offer greater employment opportunities than many of the outlying areas and I cannot see any reduction in demand making an impact on house prices.
On the rentals front you wouldn’t know the EU Referendum was even taking place. Demand for rented accommodation is significantly outstripping supply and rents are continuing to rise. Many properties are letting on the first or second viewing. In fact we had the best May ever in our Rentals Department, with every prospect of repeating the feat in June and July. I’m not sure whether this is down to lethargy on the typical profile tenants we rent to (25 – 45 yrs, professional, etc with a disinterest in the EU issues) or whether the lack of accommodation in Leeds is so bad that tenants have no option but to take what’s on offer when it becomes available. Whichever, the rental market continues to accelerate at quite a pace.
The rentals property market has seen a lot of legislative changes recently. Our Rentals Team have embraced each and every one, including Right to Rent, Anti-Money Laundering, Legionella checks etc. with all our clients now comfortable in the knowledge that their properties are fully compliant. I must congratulate the Team, as I read in our industry press how difficult some agents are in adapting to the new rules and regulations. The next few years landlords will see what I refer to as ‘behind-the-scenes’ changes; recent budget changes will impact on their net profits and tax positions.
The removal of the 10% Wear and Tear Allowance will be felt by everyone who rents furnished accommodation, reducing the overall net profitability of their rental property or portfolio. The maximum 20% tax relief on mortgage interest (when it finally arrives) won’t affect clients who are basic rate taxpayers, but higher rate taxpayers, especially those who are highly geared, may see a significant change in the ‘bottom line’ of their P&L account. Such landlords may decide to leave the rental market and a ‘take a profit’ but for those who remain in the residential rental market should see their rental income grow as the sale of rental property creates a further reduction in supply, driving up residential rental values to even greater levels.
The next few years will see change for nearly everyone, in one way or another. It’s human nature not to like change (and moan about it!). However, whenever there is change there tends to be winners and losers – the winners are usually those who maintain a positive attitude towards change, look for opportunities and evolve and adapt to suit the situation. I have seen this numerous times over the last 35 years and we remain steadfastly resolute in helping our clients respond in a positive way to whatever is imposed upon them.
Michael J Moore FNAEA, MARLA – Senior Partner