This is Money has run an extensive piece with their forecast for 2024, under the sub-heading ‘Rising rents, falling mortgage rates and Renter’s Reform Bill’
It can be seen here, and in summary the article provides an overview of the challenges and potential developments for landlords in the UK in 2024.
Here are key points highlighted in the article:
- Mixed Financial Landscape for Landlords:
- Profit margins for landlords have been impacted by higher mortgage rates, with a reported 40% increase in mortgage interest payments over the past year.
- Rents have been rising, offsetting some of the increased mortgage costs.
- Landlords are facing higher capital gains tax when selling properties, with the annual exempt amount reduced from £12,300 to £3,000.
- Government Policy Changes:
- The government abandoned plans to force landlords to upgrade the energy efficiency of their properties.
- The Renters Reform Bill, if passed, is expected to provide new rights to tenants, including challenging rent hikes and substandard homes.
- General Election and Housing Policies:
- The upcoming General Election in late 2024 is expected to bring housing policies to the forefront.
- Landlords are advised to monitor the housing policies of major political parties.
- Renters Reform Bill:
- The Renters Reform Bill aims to enhance tenant protections, including challenging above-market rents and transitioning tenants to periodic tenancies.
- No-fault evictions may be addressed by the bill, but its implementation timeline is uncertain.
- Decent Homes Standard:
- The government plans to introduce a legal duty for landlords to meet the Decent Homes Standard, with updated requirements for property conditions.
- Failure to comply may result in criminal offenses and banning orders for landlords.
- Squeezed Margins and Rising Costs:
- Many mortgaged landlords are facing increased mortgage rates, impacting profit margins.
- Affordability challenges are noted, with landlords dealing with rising costs such as mortgage payments, repairs, and compliance checks.
- Rising Rents:
- Rents have been increasing, helping landlords mitigate the impact of higher mortgage rates.
- Demand for rental properties is high, contributing to rent hikes.
- Falling Mortgage Rates:
- Mortgage rates have been falling, providing some relief for landlords.
- Analysts forecast further rate reductions in 2024.
- House Prices and Market Outlook:
- Speculation about a housing market crash due to higher mortgage rates and inflation did not materialize.
- Predictions for 2024 suggest a potential 5% decrease in average house prices, but uncertainty remains.
- Landlord Exodus and Retirement:
- Landlords have sold more properties than bought since 2016, with nearly 300,000 sales.
- Regulatory changes, tax implications, and landlord retirements contribute to property sales.
- A majority of landlords are reaching retirement age, and a continued exit from the market is expected.
- Market Dynamics:
- Political uncertainty, rising rates, and psychological factors may encourage more landlords to consider selling.
- While some landlords may exit the market, the extent of the outflow is uncertain.
The article emphasizes the complex landscape for landlords, influenced by government policies, economic factors, and market dynamics. Landlords are advised to stay informed about regulatory changes and market conditions to navigate challenges and make informed decisions.
