A mortgage company chief executive is warning that house price falls of up to 15 per cent are likely between now and early 2024 - and that might represent good news for the lettings market.
Chief executive of Commercial Trust, Andrew Turner, says: “I expect house prices to drop by about 15 per cent over the next 12 to 18 months. This will bring property back to more realistic levels, because they have been overpriced for some time now.
“The reduction in property prices may well bring landlords, who have steered away from buying because of the elevated prices, back into the market.
“In July 2022, the UK average house price was £292,000. A 15 per cent reduction would potentially bring the price down to £248,200 – which is a huge saving of £43,800.
“Increases in mortgage costs are passed on in rental increases, which we are seeing in data from the industry.
“Given the extent of the rise in rents, many people may be priced out from rent being affordable, due to the rising cost of living, but the demand is so high and rental stock so low, that this is unlikely to impact landlords to the extent that they are unable to find tenants.”
Turner adds that the impact of higher interest rates on first time buyers may influence buy to let mortgage investors in turn.
He says: “Many residential first time buyers, who have been diligently saving towards a two or three per cent mortgage interest rate, have now been set back in their plan to purchase, as rates have shot up. This means less competition in the market for buying property, which is an advantage for landlords.”
September’s average rent cost in England reached £1,249 – an increase of 1.8 per cent compared to August. This pushed average rent prices over 13 per cent higher year on year.
Rent prices increased in the majority of England’s regions, with the highest rise in rental cost occurring in London. The average rental price jumped up by 6.7 per cent, which resulted in the average rent price in London rising to a hefty £2,055 per month.
However, not all regions jumped in price – the North East region’s average rental cost has dropped down to £890, which is a 6.7 per cent decrease from August averages.
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Landlords are steering away from the market because of the anti-landlord actions of the government.
Whatever one thinks of the Tories, our best hope is that they reform rental law in order to take the wind out of the sails of Shelter & Gen Rent b4 labour get it. I would support perdoic tenancies becoming "roll over tenancies" unless a section 21 is served and enforced within a set (limited) time period. If the section 21 is not enforced then its a roll over tenancy... Nothing stopping the LL negotiating a new contract and cancelling court proceedings but there would be court costs
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