by Mark Edwards
11:11 AM, 5th June 2018, About 5 years ago
Despite Brexit uncertainty and a slump in economic growth¹, the UK property sector is seeing annual house price of 2.2% however “Housing demand has softened in the early months of 2018².
London was the only region to experience house price falls. Prices in the capital were one percent lower than a year ago, the first annual price drop since the financial crisis began to affect the London property market in September 2009.
Popular estate agency Foxtons who trade almost exclusively in London and so are disproportionately affected by the sluggish market provided a rather gloomy trading update this month stating that “Conditions in the London property market remain very challenging with sales volumes lower than prior year.”
The slowdown of the economy meant the Bank of England decided to delay increasing interest rates. The Banks governor Mark Carney said: “While the storms of February and March have given way to sunnier skies, the economic outlook for the UK remains clouded by Brexit uncertainties. As negotiations progress this year, the medium-term economic climate will become clearer. As it does, households, businesses and financial markets will adjust.”
As an experienced and active portfolio landlord myself I closely monitor the property sector and speak to a large number of estate agencies both in London and across England. Generally, estate agents in London are reporting lower rents being achieved and a softening of residential sales with agents reporting a decrease in the number of full asking price offers being made.
I am also seeing an increase in landlords agreeing to “rent to rent” or “guaranteed rent” schemes. Although these schemes offer some convenience they can in certain cases invalidate your landlord insurance and create other more serious problems like for example receiving no rent, finding your property has been altered or even facing prosecution for an unlicensed HMO.
Specialist Sublet Insurance is vital to ensure insurance remains valid and a professionally drafted Rent to Rent Lease needs to be entered into by the owner with the business responsible for the sub-letting.
¹In its latest set of projections for the UK economy, published in the Inflation Report, the Bank cut its forecast for economic growth this year from 1.8% to 1.4% and trimmed its growth for the following two years from 1.8% to 1.4%. https://www.bankofengland.co.uk/inflation-report/2018/may-2018
² Halifax House Price Index 08/05/2018 https://static.halifax.co.uk/assets/pdf/mortgages/pdf/April-2018-House-Price-Index.pdf
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