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RENTERS’ RIGHTS BILL UPDATE – WHAT BATH LANDLORDS NEED TO KNOW.

Posted on by prateek

On Wednesday, Parliament had the first hearing of the Renters’ Rights Bill, the revision by Labour of the previous government’s Renters Reform Act. There was a lot of information given during the hearing so let’s take a moment to take a look at what this could mean for your investments in the future.

Let’s begin by reassuring you that nothing groundbreaking was heard in these proposals that will catch you off guard. Most of what was heard was already in the previous bill by the Conservative government. Regardless, let’s break down what was involved and what might affect you as a Bath Landlord going into the future.

THE END OF SECTION 21 (‘NO FAULT’) EVICTIONS:

The big headline in the news outlets was the abolition of Section 21 evictions. For years now, landlords have been able to issue a section 21 notice, which gives tenants two months to leave the property through no fault of their own. Many have viewed this as unfair, particularly when they have been used to displace tenants who challenge landlords’ provision of poor living conditions or challenge rental increases they deem unfair.

Landlords won’t be without power. You will still be able to evict tenants who break rules under Section 8 of the Housing Act. This will cover situations such as failure to pay rent, damage to the property, and antisocial behaviour. The main difference here between a section 21 and a section 8, is that the latter requires a court order. The concern here is that in recent years these court orders have faced significant delays. However, the government has assured us that they will work to clear the backlog and streamline the process.

RENT INCREASES AND BIDDING WARS:

Another important point heard on Wednesday’s hearing was the ban coming in on bidding wars. Over recent years, some cities have seen an influx in rental bidding wars. This has been caused by over-demand and under-supply, which has then led to two people trying to offer more than the other over the asking rate of rent and leading to ‘a bidding war’. This new piece of legislation will make it illegal to ask or accept any offers from potential tenants over the advertised rent. This may stabilise the market, but it is something to keep in mind when setting rent prices for your Bath rental property.

In addition, in-tenancy rental increases will be limited to once a year and will no longer be allowed during the period of the fixed term of a tenancy. Whilst this ban may seem restrictive, it does provide a sense of stability for tenants and in turn may encourage longer-term lets.

ENERGY EFFICIENCY AND PROPERTY STANDARDS FOR BATH LANDLORDS:

 This proposed act introduces a stricter regulation on the quality and energy efficiency of rental properties. By 2030, landlords will need to ensure that their properties are given an Energy Performance Certificate (EPC) rating of C or above. (For more information about EPC Certificates see this article: How will the new EPC rules affect Landlords? (residebath.co.uk)). This is a long-term requirement, so although it may require investment at first, there is plenty of time to plan these changes, check the regulations, and plan accordingly.

The introduction of the Decent Homes Standard into the private rental sector means that Bath Landlords will also need to ensure their properties and maintained to a certain standard. This will particularly look at hazards such as dampness and mould, a common issue among Bath properties in particular. It is a move that is aimed at improving the overall quality of rental accommodation and whilst it may mean more responsibility for more landlords across the city, most landlords will already be meeting these standards.

GOING FORWARD:

If any one of these proposed changes is causing any concern then do not hesitate to get in touch with our team, we would be happy to help you understand these changes further. Being a team in Bath affiliated closely with the governing body, Propertymark, we are continuing our professional development and are constantly keeping up to date with the latest changes. Do also keep an eye on this blog page which is continually updated with all the latest news in the property industry here in Bath and beyond.

The property Market in Bath 2024 – A strategic guide:

Posted on by prateek

Are you a homeowner in Bath? Are you thinking of moving home in the next 6 to 12 months? Whether you’re aiming to buy your dream home or sell a beloved property, understanding the property market here in the local area is crucial.

You might also be a Bath landlord, possibly looking to sell up your portfolio or add another property to your portfolio.

Also, you could be a first-time buyer wondering if now a good time is to get onto the property ladder.

Regardless of your situation, understanding if the Bath property market favours buyers or sellers is crucial to making informed decisions.

By examining the local market, we can gauge the current market trends, prices, and opportunities, allowing all parties – buyers, sellers, and first-time buyers – to strategically plan their moves.

WHAT SORT OF BATH PROPERTY MARKET ARE WE IN?

Those familiar with our articles will know that the measurement of whether it is a buyers’ or sellers’ market is gauged on the proportion of properties marked as ‘Sold STC’ and ‘Under Offer’ compared to the total number of properties that are currently on the market.

For example, if there are 46 properties sold STC and 100 available/for sale then we are looking at a percentage of 46% which would indicate a sellers’ market. See below for the way we gauge this figure is as follows:

  • Extreme Buyers’ Market (0%-20%)
  • Buyers’ Market (21%-29%)
  • Balanced Market (30%-40%)
  • Sellers’ Market (41%-49%)
  • Hot Sellers’ Market (50%-59%)
  • Extreme Sellers’ Market (60%+)

The significance of these brackets can’t be overstated. They directly impact everything from listing prices to negotiation leverage.

CURRENT BATH PROPERTY MARKET STATUS:

When we look at the most recent findings, we can see a slight shift in the market. Within the postcode districts of BA1/2, there was an extreme sellers’ market in 2022 at 70%. Then throughout 2023, the Bath property market was in the low/mid 50% range indicating a hot sellers’ market. Then looking back to the start of 2024, the decrease has continued in the way of a buyers’ market and we are now at 51%.

WHAT DOES THIS MEAN FOR BATH’S PROPERTY MARKET?:

FOR BATH SELLERS: We are now in a property market where sellers need to start being more strategic, flexible and patient. You need to brace yourself for a longer time on the property market and make sure you are getting your house valued realistically. Setting the price right is crucial for attracting suitable and proceedable buyers.

So why is this? Well, when we look at the figures, the chances of selling your home in Bath quickly, have dropped over the last few years.

Of all the Bath homes that left estate agencies’ books between July 2022 and June 2023, 65% of these homes sold and completed so the remaining 35% left the market unsold and withdrew. Since January 1st 2024, that figure has dropped again to 58% of properties selling.

So, what can be done to boost your chances of selling your home in today’s market? Well, empowering the use of modern technology is the first port of call. Make sure your agent is listing your home across multiple channels and we are not just talking about the traditional property portals such as Rightmove, we mean social media channels too. Creating virtual tours of your property for the listing is also a great way to better present your home, so make sure your agent is providing this service, especially for higher-end properties. Interactive property listings such as 3D space tours where the user can look all around the property from the comfort of their home is becoming very popular.

FOR BATH BUYERS: Expect intense competition. If you are after highly sought-after properties, such as three-bedroom houses, then securing pre-approved mortgages and positioning yourself in the most proceedable way possible is going to be hugely beneficial and put you ahead of other prospective buyers.

Remember, four out of five sellers are also buyers, so what you may lose on the sale might be compensated for on the purchase. External influences such as global economic trends, inflation, and interest rate repercussions could all cast shadows on the Bath property market.

FINAL THOUGHTS:

As we progress into the eighth month of 2024, the Bath property market presents challenges and opportunities for buyers and sellers.

Understanding these market subtleties is crucial for anyone considering a move, from existing homeowners to seasoned buy-to-let investors, first-time buyers, or those looking to relocate to Bath.

Stay flexible, stay informed, and remember that your home-moving experience is as much about the journey as the destination.

What are your thoughts on Bath’s developing property market since we have a new Government?

Do you anticipate any other shifts or trends in the Bath property market?

What are your local insights and experiences?

Please do share them.

Property Insights: How to sell your property faster in 2024

Posted on by prateek

One of the most crucial indicators of the health of a property market is the length of time it takes to sell a property. The metric provides insight into supply and demand dynamics, and the market confidence that people have, and also is a market of the efficiency of estate agents in an area.

For homeowners in Bath and investors alike, a better understanding of these trends can help with decision-making. When properties sell quickly, it is indicative of a strong market and reflects a high demand. However, a long sale time often reflects either a surplus of properties on the market or decreased buyer interest.

So, in summary, monitoring the performance of the market is helpful when wanting to make informed decisions about buying or selling.

AVERAGE TIME TO SELL A PROPERTY IN BATH:

Whether you are a Bath Landlord looking to liquidate your buy-to-let investment or a Bath homeowner contemplating selling your home, understanding the latest market trends is crucial. Recent data from Q2 of 2024 provides us with valuable insight into how the local property market has been performing.

Recent independent research indicates that of the 624 Bath homes sold in Q2 of 2024, it has taken an average of 41 days to agree on a sale (Sold STC). This is a notable improvement on Q1 of 2024 where we saw an average time to sell STC of 56 days.

However, this is an average so not all properties sell in this time frame. It is important that we break down the time to sell STC into separate price brackets so we can see what types of properties might sell quicker than others.

PERFORMANCE BY PRICE BRACKET:

The time it took to find a buyer in Bath in Q2 of 2024 by price bracket:

  • Under £100k: 25 days
  • £100k-£200k: 41 days
  • £200k-£300k: 36 days
  • £300k-£400k: 34 days
  • £400k-£500k: 40 days
  • £500k-£1m: 54 days
  • £1m+: 44 days

The time it took to find a buyer on average across the UK in Q2 of 2024:

  • Under £100k: 69 days
  • £100k-£200k: 63 days
  • £200k-£300k: 69 days
  • £300k-£400k: 62 days
  • £400k-£500k: 64 days
  • £500k-£1m: 81 days
  • £1m+: 92 days

TIPS FOR BATH HOMEOWNERS TO EXPEDITE THE PROPERTY SALE:

If you are a Bath homeowner looking to sell quickly, then there are a handful of strategies you can employ to speed up the process.

  1. CHOOSE THE BEST BATH ESTATE AGENT: Selecting a reputable Bath estate agent with a proven track record for providing the best service possible is crucial. Ask all the agents you approach their average time to find a buyer. An experienced agent will be able to provide detailed information that can be tailored to your specific inspiration.
  2. Ensure your Bath Home is a high-quality listing: Make sure your property is listed on all the major property portals. Make sure any agent you use is getting professional photography as a standard as the first impression is crucial. Alongside this make sure that your property has a well-crafted description, allowing readers to better assess if the property is of any interest to them. All of these aspects allow a home to stand out and are vital when coming to a competitive market.  
  3. Effective Marketing: Given the increased number of listings coming to market in recent times (Over 200,000 more homes listed nationally now versus two years ago), additional marketing efforts can go a long way. When listing your property, consider additional marketing efforts that agents may offer such as premium listings, video tours/virtual tours, and social media promotional videos.
  4. Competitive Pricing: Price your property competitively. Overpricing can lead to longer times on the market, while a well-priced property can attract more immediate interest.
  5. Flexibility and Presentation: Be flexible with viewing times. Always make sure that your property is clean and presentable at any time when on the market. For potential buyers, first-time impressions are crucial and a well-maintained and presented property will impress buyers and can potentially expedite the sales process.

TIPS FOR LANDLORDS LOOKING TO SELL:

If you are a landlord looking to sell your rental property, then it is important to weigh up the pros and cons of keeping your tenants during the sales process.

PROS:

If your property is likely to attract another potential investor rather than a homeowner, then having a tenant in place can be advantageous as it can attract another potential landlord due to the appeal of having rental income from day one. Alongside this, tenants who have kept the property well maintained can showcase the value of the property well.

CONS:

On the other hand, if you have tenants in a property who may not cooperate with viewings and do not maintain the property to a high standard then this can deter potential buyers.

Overall, it is crucial to determine the approach that is best for your specific situation. It is crucial to consider factors such as current market conditions, and the type of buyers you are trying to attract. For example, if the property is in a high-demand area with a robust rental market then keeping tenants in may present itself as an attractive quality. However, if your target market is owner occupiers then keeping tenants is going to deter buyers and vacant possession might make the property more appealing.

PROPERTY MARKET CONTEXT:

It is important to note that these statistics only relate to the properties that have successfully sold. Nationally, only about 53% of properties that have been listed have ended up selling through to completion. This means nearly half the properties that come to market don’t achieve a sale. This is often due to poor marketing and agents overpricing the property. As committed property agents in Bath, we are here to help give you the best advice when it comes to either listing your property for rental or for sale and would be happy to help any time.

So, what did the King’s Speech tell us about the housing market?

Posted on by prateek

The state opening of parliament saw the king’s speech set the agenda and main priorities for Kier Starmer’s governments. This year’s speech, delivered by King Charles, is the first for a Labour Government since 2010, following the recent general election. With 30+ bills highlighted by the king, there was nothing seismic for tenants or landlords. However, it is still important to look over what was announced for the property industry. 

  • THE RENTERS RIGHTS BILL

A major focus is the renters’ rights bill. This is labours version of the renters’ reform bill. However, this intended overhaul to the private rental sector in England is set to end the mistreatment of tenants and provide a secure step up for first-time buyers.

Key Proposals Include:

  • Abolishing Section 21 with clear grounds for possession
  • Introducing ‘Awaab’s Law’ with clear legal expectations for landlords
  • Strengthening tenant rights, allowing challenges to rent increases and preventing rental bidding wars.
  • Creating a digital private rented sector database for landlords, tenants and councils.
  • Requiring landlords to consider tenants’ requests to keep pets, with the option for insurance against pet damage.
  • Implementing a ‘Decent Homes Standard’ for the private rental sector.
  • Enhancing local councils’ enforcement powers to target rogue landlords.
  • Establishing a new ombudsmen service for dispute resolution.
  • Making it illegal to discriminate against tenants on benefits or with children.

Most of these points were in the Conservative Renters’ Reform Bill – so there is nothing new here or scary for landlords out there as this has all been in the pipeline for a while.

  • Planning and Infrastructure Bill:

Labour is aiming to accelerate and modernise housebuilding and infrastructure planning laws. This bill focuses on:

  • Increasing the capacity of local planning authorities
  • Modernising local planning committees
  • Rationalisation of the planning system to deliver critical infrastructure
  • Leasehold and Commonhold Reform Bill:

Labour plans to publish draft legislation to extend the Leasehold and Commonhold Reform Act 2024. The main goal this bill is out to achieve is to enhance the rights owners have over their properties. This includes:

  • Addressing ground rent issues
  • Reinvigorating commonholds
  • Putting into action the remaining law commission recommendations

In summary, it is to be noted that these are not laws yet and all these above matters have to pass through a lot of hurdles to come into practice. Still, Kier Starmer’s invigorated government is planning to make sure that these matters are put through and at the top of the agenda.

How to Navigate the Property Market after the election and what could be a ‘Starmer Surge’

Posted on by prateek

How do we navigate, what some people are calling, a potential ‘Starmer Surge’ following the general election?

Despite the anticipation and the ever-continuing speculations around this year’s election, the impact on the property market has been negligible.

Trends in the market, buyer interest, and property values have remained steady, showing no significant fluctuations. So given the political uncertainty, it suggests that factors that affect the property landscape are more economical than political, such as interest rates, demand and supply.

Homeowners in Bath and beyond have maintained their focus on these core elements and have demonstrated resilience to such economic turmoil. So, as political commentators predict a Starmer-led Labour ‘super majority’, could we see another ‘Boris bounce’ in the post-election months like we saw in early 2020?

IF WE DO…WHAT DO WE CALL IT? A ‘STARMER SURGE’?

Before we jump the gun, let’s look at why there are bigger fish to fry irrespective of who wins the election:

Homeowners looking to sell their properties will encounter increased competition. Starmer surge or not, as more homes continue to be listed for sale, the significant rise in mortgage rates has significantly impacted buyers’ incomes and their affordability to buy homes. This has led to a shift in demand. It has also caused price corrections in buoyant regions, especially in the south.

AVOIDING THE OVERPRICING TRAP:

In the initial wake of any election outcome, we will likely see larger estate agents offering overinflated valuations to homeowners, only to suggest a price reduction months later. Larger agencies can afford to do this, but small agencies rely on consistent sales and thus tend to offer more realistic prices the first time of offering.

We have played witness to numerous Bath homeowners being advised to place their properties on the market at elevated prices after significant economic and political shifts. Over time, with few viewings and no genuine offers, they are reducing the asking price. Many homeowners, led with the prospect of achieving more for their property, end up missing out on desired homes. Many may think they are immune to such tactics, but the higher valuation is often very tempting.

It is natural to want to price your home ambitiously. While pricing your property with a high price tag is totally understandable, refusing to adjust the asking price after a few weeks of little to no interest can be a costly error. An overpriced home can stagnate, leading to potential buyers suspecting something is wrong with the property.

A lack of early interest and viewings should be seen as a clear sign that you need to reconsider the asking price. Being responsive and proactive is crucial if there are no serious inquiries or offers within the first few weeks. By doing so, Bath homeowners can avoid the traps of a stale listing and increase their chances of a successful sale and move.

THE CURRENT UK AND BATH PROPERTYMARKET LANDSCAPE:

If one compares the number of UK homes sold year to date (YTD) in 2024 (459,682), we can see it is 11.3% higher than the net sales of 2023, yet we are 22.9% lower than the YTD figure in 2021. However, if we look at the number of UK homes for sale today then there are around 694,000 homes for sale compared to 481,000 homes for sale in May 2021. Now, let’s delve deeper into the stats for specifically the Bath region.

So, linking back to what we have said previously, why is pricing your home right the first time so important? Well, only 51.9% of properties that have left the market since the start of the year have sold to completion. The other 48.1% of properties left the market unsold. So, you can see that by having an almost 50-50 chance of selling, you need to make sure your prices are realistic and that you are getting a great agent to market.

RE-THINKING THE SELLING STRATEGY:

The Bath property market tends to shift collectively. The market remains manageable as long as the homeowners aren’t facing financial losses and can manage an upgrade. Many assume continuous gains when selling their home, but real profit only materializes when one parts with your final property. Once a property is put on the market it is crucial to focus on the online and offline marketing journey. The initial four weeks provide insights into whether the property is priced correctly, gauged by the number of web views on portals, actual viewings and offers received. One strategy employed by some Bath homeowners is to price their home at a slightly lower price to spark more interest and drive up offers.

Boutique agents, such as ours, can offer you a more authentic experience and a realistic valuation in a challenging and ever-fluctuating market.

SWITCHING AGENTS OR GOING ONLINE?

In a slow property market, patience can wear thin. If considering switching agents, sellers should evaluate the current agents’ efforts and communication frequency. Multi-agency agreements can be another option, although these are becoming less popular due to the higher fees often associated.

Online agencies could be another option. However, their one-size-fits-all approach can fail to capture the nuances of individual properties, making them a less effective option in slower markets.

FINAL THOUGHTS:

The current property market is a complex beast. ‘Surge or no surge’ it is all about maintaining a realistic asking price. The freeze on the BoE base rates is a welcome pause. While it won’t create a frenzy like the stamp-duty holiday of 2020, any possible drop in the summer or early autumn will be a welcome respite. With the right strategies and awareness, Bath home sellers can effectively navigate these waters and ensure their property finds the right buyer at the right price.

If you are interested in selling or buying a property, then don’t hesitate to get in touch with the team. Contact information can be found at the top of the page.

So, what did we learn at Propertymark One?

Posted on by prateek

If you are involved any way in the property landscape in the UK and beyond, then your social media will likely have shown you that this year’s Propertymark One took place a week ago. If you missed that news then yes, the annual conference led by the property sectors professional body, Propertymark, was held on the 14th of June at the London ExCeL and gave us industry professionals a days insight into the changes the property world may see in the next 12 months. Alongside this we also got presented with new ideas around how we as professionals should be utilising our social platforms. This blog will give you a look into the day we had and our key takeaways from this event going forward.

election year graphic with ballot paper and date

The General Election –

Well it’s nearly here, you can almost touch those 2024 general election ballot papers. Last month, Rishi Sunak called a sudden general election following a positive start to the year for his party. In his announcement speech, he said the economy was growing faster than any other country in the G7, and his government had begun to reduce inflation in the country. However, as is customary, the opposition is keen to point out that it is more likely he called the election as the economy is stalling.

Either way, the general election is nearly upon us and the country is more than likely to see a new party come into power, most likely Labour if recent polls are to be believed. So what did the experts at this year’s Propertymark One have to say following the sudden news?

Well, the overarching opinion is that in the next couple of weeks, we are likely to see a slowdown in the property market’s cogs, a property pause if you will. People are most likely to stay put and wait to find out what the new leadership party may do to affect parts of our income streams, such as stamp duty, and other taxes before they make a move toward moving home. If stamp duty is reduced, or even as some manifestos are suggesting, get abolished entirely for young people and first-time buyers, then we may see a sudden influx of house buying. Either way, the election will bring about change and it is also more than likely that we will see a spike in the housing market (potentially an 18% increase in the first 4 weeks after the election based on past data) after the election if past trends are to continue, and inflation continues to fall.

Propertymark membership

The Importance of being a Propertymark Member –

Propertymark is the professional body for the property sector and continues to equip member businesses and individuals with all the necessary tools, training and qualifications for all sectors and staff. Nationally recognised, Propertymark allows agents to display their level of CPD (continued professional development) and the professional standards they adhere to.

This year’s PMOne continued to reiterate that being a PM (Propertymark) member is not only important for showcasing your level of professionalism in the industry but also the benefits of being a PM member. With a new level of qualifications, new benefits for members and the introduction of the company membership, it is an exciting time to be a member. So, as the market and the industry is due to see significant changes in the coming months, it is reassuring for our clients to know that we are Propertymark protected and are keeping up with the latest industry changes.

social media AI generated background

Marketing as an Agency –

In the past marketing as an agency involved just creating some form of content showcasing your listings and maybe a new team member if you were so lucky and creative. However, in recent times this has changed. People are more interested than ever in doing business with people they feel they already know when they want to bring their house to market or find a place to rent.

There was a big emphasis this year on agencies marketing themselves differently. Instead of just showing off the latest and greatest home you may have coming to market and boasting the price it is on the market for, we should be getting our faces in front of the camera, giving people a voice and person to engage with and then do more than just show off the property. People want to hear about the story behind the house and the rooms inside, the land surrounding, and all that good house stuff.

Most importantly, it was advised that agencies should be doing more than a whistle-stop tour of a home on their social platforms. They should be advertising their expertise and knowledge of the local area they cover, showing the latest news in the property landscape, going out locally and showing off the people in their company, going out and about in the neighbourhoods, showcasing local places people may want to visit or be interested in if they are re-locating and are new to town. The idea is that agencies should not only be a place people come to for their home, but for advice about the place they call home.

All of this effort is in the pursuit of making your agency stand out from the crowd, while at the event we were asked to sit down if we didn’t post certain things on social media, and by the end, in a room full of around 50 people, just 3 were left standing. Again, agencies need to become a place people can go to not only for a home but for advice on the local area or an issue they’re having in their property and know your agency is a place where they can step into for the first time, but feel like they are already friendly with you and have made a connection.

This effort is also made to create a trail of breadcrumbs that may lead to future business. For example, if someone is looking to relocate to the city and previously saw a video of your agencies showcasing the beauty of the city you are in, then they may be enticed to get in contact with you first over the other competing agents in town. Alongside this, they may also see some content of yours regarding the local amenities in the city and then trust that you know the city well, leading to a sense of trust, and then contact you regarding a sale of a house. The more listings and people you make an impression on, the more people are likely to recommend you and word of mouth will spread. Leaving these breadcrumb trails back to your agency across various channels is crucial to success in the digital age.

Rounding-Off –

Overall then, the key takeaways from this article are:

  1. Be prepared: There is more than likely to be a flurry of activity after the election. Be prepared for any outcome. Make sure your team know and is made aware of any legislative changes that may be put into effect over the coming months.
  2. Propertymark Membership: This is continuing to be an amazing asset to any team of any size. Individual or Company membership is available and will not only boost credibility as an agent but come with some amazing perks too.
  3. Social Media is Power: The modern era of property agency is upon us. AI assistance will be here before we know it and social media will likely become the leading influence in the next generation choosing an agency when renting or buying a home, based on their connection with the people in the company and the brand they are presented with online. An online presence is so important and you must take the steps now to cement yourself in your local area and get that extra yard on the competition.

So, if you want to get connected with us and see what we are doing on social media, then please go and follow us on all platforms, and as ever, if you want to come and say hi you can find our contact details at the top right of the page.

Why has the UK property market not cashed?

Posted on by prateek

Across the UK the property market has met significant challenges over the past 18 months and yet in its wake has displayed a strong resilience to its forces. Many analysts predicted back in the autumn of 2022 that the country would see a dramatic downturn in house prices driven by economic uncertainty, cost of living crisis, and ever-increasing mortgage rates.

However, contrary to the dire forecasts predicted many months ago, the prices of houses across the country have remained relatively stable. This article will dive into the reasons behind this unforeseen occurrence and provide valuable insight for both homeowners and landlords alike.

ECONOMIC PREDICTION VS REALITY:

Liz Truss vs the lettuce…who remembers that? Well during her time in office, she and the treasurer at the time, Kwasi Kwarteng, produced their highly controversial ‘mini-budget’. Following this, there were widespread predictions that there would be a dramatic fall in house prices and some forecasts even predicted that we would see a decline of 20-35%. Yet, these never materialised. The decrease has been instead modest, with land registry figures showing about a 3.12% decline over the previous 18 months.

If we look at the past 12 months, British house prices have increased a measly 0.89%, when compared to this time in 2023. So, why were the forecasts so inaccurate?

IMPROVED LENDING PRACTICES:

During previous economic downturns, people have often cited banks’ poor lending standards. However, changes to mortgage regulations require banks to ensure borrowers can afford their monthly repayments, even if rates increase significantly.

This precaution has provided a substantial buffer for homeowners, enabling them to cope with the rising rates.

For example, in 2007 shortly before the global financial crisis, many borrowers did not need to prove their income to their banks. The 2014 MMR changes addressed this issue, ensuring that lending was based on sound financial footing. Consequently, many homeowners could still afford their mortgage when rates increased recently.

EMPLOYMENT & WAGE GROWTH:

Another crucial element has been the relatively stable employment situation. Although the UK experienced a brief recession over the winter, unemployment rates have remained low at 4.3%. For comparison, the unemployment rate during the 08/09 financial crisis was at 8.5%. Moreover, the average wages (inc. bonuses) have increased by 5.7% over the past year, reaching their record high at an average of £682 a week.

The combination of low unemployment and increased wage rates has led to fewer homeowners being forced to sell their homes due to financial difficulties. Banks have also been proactive and provided those with financial difficulties solutions to these problems with interest-only payments and extended mortgage terms to help them manage their repayments.

SUPPLY AND DEMAND DYNAMICS:

The impact of economic challenges on the property market has been more evident in transaction volumes than in prices. Typically, there are about 1.16 million house sale completions annually in the UK. However, during the ‘race for space’ seen at the back end of the COVID lockdowns, this number surged to 1.48 million. It then dropped back down to 1.26 million in 2022 and further to 1.02 million in 2023.

So, while demand has decreased because of higher mortgage costs, supply has also been reduced because of potential sellers choosing to wait for better market conditions.

On a final note, on this subject. There was in fact an increase in net house sales in the first 5 months of this year when compared to house sales in the first 5 months of 2023. However, there was only a 9.9% rise in new homes coming to the market.

FIRST-TIME BUYERS AND THE RENTAL MARKET:

Arguably the ones affected by the rising mortgage rates the most are first-time buyers. Typically, this is due to the larger amount they have to borrow in proportion to the home value. Despite this, they have been more active in the market than expected. This has likely been influenced by the rapidly rising rental costs. This rent increase has motivated many to purchase homes, often with financial help from families.

On that subject, data from the English Housing Survey revealed that 11 out of 30 first-time buyers received financial gifts from their families in the past year, up from 8 out of 30 in 2022. This support has played a vital role in the continued activity in the housing market.

THE BATH PROPERTY MARKET:

So, locally, how is this all affecting the market?

Looking at the monthly exchange of contracts data, the average price paid from may 2019 to April 2020 for a home in Bath (BA1/2) was £497,595.

In comparison, the average price paid between June 2023 and May 2024 has been £575,385. This is a rise in prices of 15.6%.

Now, it is important to stress that Bath home prices have not risen by 15.6%, only the average price paid between the two 12-month periods.

OUTLOOK FOR HOUSE PRICES:

Eighteen months ago, economists almost unanimously predicted a decline in house prices. Now, many forecasters are predicting growth. Estimates vary. Some are predicting an increase of around 4%, while others are suggesting a lower 3% rise. However, stretched affordability is also leading some to predict a flat market over the coming months.

What we can take away is the resilience and impressive ability to weather economic storms in the UK market. Partly thanks to sound lending practices, but also due to stable employment levels, rising wages and family support. While the volumes of sales have decreased from the hefty days seen in 2021, house prices have remained more stable than many predicted.

If there is concern about how the upcoming election may affect the market then do not fret. It is our belief that it will hardly have any effect on the medium-term direction of the property market (On the assumption none of the parties have any creative ‘wacky’ plans in their policies which are not yet published at the time of writing.)

So, as we enter the second half of the year, the property markets resilience will continue to be tested, but foundations laid over recent years are providing a solid structure for the navigation of any future challenges.

Rental Market Update: May 2024

Posted on by prateek

With an election just announced, the latest trends in and the summer holidays fast approaching…Toby is here to catch everyone up with the most recent trends from the rental market here in Bath!

As always, the YouTube video is below. Let us know what your thoughts are in the comments. Until next month folks!

A Bath Landlords Perspective on Recent Trends.

Posted on by prateek

Between 2020 and 2022, demand for properties in the UK far exceeded supply. This drove rents to unprecedented levels.

Here in the southwest, for example, the average rent has risen from £913 per calendar month (PCM) in 2016 to £1,339 PCM year to date in 2024.

Despite this, the last 12 months have seen a slight increase in the number of properties available for rent, both nationally and regionally. This is lending to a more balanced market. This article will explore these trends and see if the same is happening within Bath.

NATIONAL AND REGIONAL TRENDS IN BY-TO-LET:

Nationally, the rental market has witnessed a notable shift in the last 12 months. During the pandemic, many factors contributed to the surge in rental prices. There was a migration of people seeking a larger living space and avoiding the disruption of new housing developments. As restrictions eased, the rental market began to show signs of stabilisation. In a bid to help mellow the rising rental prices, there has been a slight uptick in the supply of rental properties.

In April of 2023, the average rent achieved for a new UK rental property was £1,641pcm. By April of 2024, this has increased by 8% to £1,772pcm.

This is a positive sign for rental prices levelling out, as only 12/18 months ago, the increase was in the mid to late teens.

The southwest continues to be ahead in this national trend of rent increases. In April of 2023, the average rent of a new property coming to the market was £1,166pcm. This increased 12.3% in April of 2024, to £1,309pcm.

The increased supply of rental properties has brought relief to tenants, who had been grappling with 20%+ increases in rent per annum for some types of properties over the last few years.

So, landlords, what does this mean for you?

Despite this rise in supply, the demand for rental properties continues to remain very robust. This ensures that yields continue to be attractive for landlords.

THE BATH RENTAL MARKET:

On a local level then what is going on?

Well, a similar trajectory can be seen here in Bath. Post-pandemic, rents have been surging due to that imbalance in supply and demand for rental properties.

For this analysis, we are looking at the first four months of 2023, versus the first four months of 2024. In 2023, 1,227 properties came to market in the Bath area (For this the postcodes are BA1/2) and attained an average rental value of £1,684pcm.

IN THE FIRST FOUR MONTHS OF 2024, 1,158 PROPERTIES HAVE COME ONTO THE RENTAL MARKET ACHIEVING AN AVERAGE RENTAL VALUE OF £1,860PCM, A RISE IN RENT OF 10.5%.

So, for landlords present and future, is buy-to-let a savvy scheme to invest in, in 2024?

Despite recent market adjustments, Bath remains a compelling investment for several reasons. They are as follows:

  • Strong Rental Demand:

Bath’s rental market continues to benefit from strong demand. The city’s attractive location, good transport links, and quality of life make it a desirable place to live, ensuring a steady stream of potential tenants.

  • Affordable Property Prices:

Compared to other regions, Bath offers a relatively affordable price. This combined with solid rental yields and long-term, stable, capital growth, makes it an appealing option for buy-to-let investors.

  • Economic Growth and Development:

Bath continues to experience solid economic growth. Ongoing developments within infrastructure and amenities are not only increasing the quality of life for residents but it is also boosting the rental market by attracting more people to the area.

  • Long-Term Investment Potential:

Recent stabilisation in the rental market suggests a move towards long-term stability. For landlords, this means the potential for consistent long-term rental income and growth over time.

WHAT ABOUT OUR TENANTS IN ALL OF THIS?

Tenants may be feeling concerned about all of this. Burdened by the recent increases in rent, it is important to note that these rent rises have aligned with the rise in inflation over the medium term since 2016. So, in real terms, the cost of renting has not disproportionately increased. However, some tenants are still continuing to struggle due to a lack of rise in wage rates.

There is a glimmer of hope for those tenants wishing for a more balanced market and reduced rate of rent. With more supply leading to more opportunities for renters to find a home that suits their needs and their budgets, it is likely there is more place for tenants to get their rent down.

THE FUTURE OUTLOOK FOR BUY-TO-LET IN BATH:

Looking ahead, the market here in Bath appears poised for continued growth and stability. This is due to the combination of strong demand, affordable prices, and the city’s continued economic growth. Mixing this all together leads to Bath remaining a valuable investment opportunity for potential Landlords.

Now is an opportune time for those sitting on the fence about the buy-to-let market to enter. The local and national stability of rental prices indicates a mature and sustainable market that has reduced risk and volatility.