We’ve been back at work for a couple of weeks now following the Christmas break and business is back on track as if we hadn’t been away – there’s still a shortage of property for sale, buyer demand for most properties is excellent and we have plenty of quality tenants looking for quality rented accommodation.
My diary for valuations in December dropped to a record low, but requests are on the rise again and it looks like I’m in for a busy few weeks ahead. The Brexit issue didn’t appear to have had any impact on business (statistically) but since the General Election result I’ve had a number of existing and potential clients tell me they were procrastinating about whether to buy or sell. The tone I am now hearing is very positive with clients clearly having plans for 2020.
We usually see buyer demand drop off in November but in 2019 it only declined the week before Christmas. As usual demand was pretty flat through the holiday period (apart from the usual spike in property views on the portals of Rightmove and On The Market) but I’m pleased to say the numbers are back up as usual. Family semis are still experiencing the highest level of demand, with multiple offers on a couple of houses we’ve recently listed.
Buy-to-Let demand remains very strong. The election made a number of investors think twice about committing to purchase additional properties, with Labour having some scary pledges in their manifesto, but now that’s out of the way I’m getting calls every day from buyers eager to acquire more stock. Demand is across the spectrum, with one and two bedroom flats producing 5%+ gross yields being just as popular as student HMO’s generating 7%+. In certain areas of Leeds, demand for student HMO’s is even stronger than it was back in 2005 and 2006, when the market was booming. Local buyers are as keen as ever, but we’ve seen a significant increase in demand from out-of-town and overseas investors.
With lower than expected GDP figures released this week, there is the prospect of the bank base rate coming down, yet again. Santander this morning (Wednesday) reduced its savings rate on the 1,2,3 Account from 1.5% to 1% for investments up to £20,000. Larger amounts invested struggle to generate even 1% with some bank rates a pathetic 0.05%. As interest rates on other savings and investment accounts likely to follow suit, if past-experience has taught me anything, Buy-to-Let’s will become even more popular. I expect yields to come down only a little further in 2020, as my prediction is for rents to rise as prices rise, one negating the other to a degree.
Of course, if interest rates do fall, mortgage rates are likely to become even more competitive. They are already very attractive with rates lower than I have ever known them. When Julie and I got married and bought our first home in Cookridge, interest rates were around 10%. By 1990, variable rates had risen to 15%! Today, standard variable rates are just under 5% across the market but there are much better fixed rate and discounted deals. I’ve just remortgaged some of my Buy-to-Lets at just over 2% fixed for 5 years.
Improved affordability with lower mortgage rates will undoubtedly maintain demand for property, if not fuel the demand further. This will apply not just to Buy-to-Let investments, but also to owner-occupiers. I accept this is not welcome news to first time buyers, especially if Government goes through with its proposal to withdraw the Help to Buy Scheme. I’m hopeful this new Government will take heed of some of the proposals from Labour (and the other parties) who were proposing very positive means of stimulating house building (admittedly some were a little ill-thought through) but any step forward to provide more suitably priced housing for first time buyers would be good.
I thought that closing the door on 2019 was going to see the back of legislation changes for the rental market, at least for a short while. How wrong can one be? Within two weeks of 2020 we’re told Government is pressing forward with the Electrical Safety Standards of the Private Rented Sector (Regulations) 2020 bill, with target implementation date of 1st April. From the end of March all new tenants will have to be issued with an Electrical Installation Condition Report (EICR’s) along with the Gas Safety Certificate, the EPC, the Deposit Scheme Certificate, etc. before they move in. The report will be valid for 5 years, unless there are any alterations to the electrical installation in the property in the meantime; landlords and agents are going to have to be vigilant with regard to any adaptions a tenant makes during their occupation of a property. When I used to do quarterly inspections (many years ago now!) I’d come across some very questionable ‘DIY’ sockets, with surface mounted 13A cabling, into which fan heaters, irons and hairdryers have been plugged in, which the tenant readily admitted was their handiwork due to poorly sited sockets elsewhere in the room. I wonder how many of these ‘additions’ go unnoticed by landlords, and estate agents?
I’m delighted this legislation has come around, although it’s going to increase our workload substantially. We’ve been recommending landlords have EIRC’s undertaken for two or three years, both for the safety of our tenants and to ensure our landlords’ Building Insurance wasn’t compromised in the event of an electrical fire. Estate agents have known Government was going to implement this legislation at some stage but I have to admit I thought Brexit was going to push it into the ‘long grass’ for another year or two. It doesn’t look like 2020 is going to be any less busy than last year!
If you are having any issues with the renting of your property or you’ve decided the time has come to let someone else do the letting and management for you, please get in touch with me or Angie Wright, my co-director in charge of our Rental Department. We’d be delighted to talk things through with you.