Support, Advice and Experience within the Property Market

2016 and beyond

From Robert Ulph on January 12, 2016

Robert Ulph, Managing Director for Pennington Lettings and Estate Agency and ARLA regional representative for Suffolk, Norfolk and Cambridgeshire, looks at the property lettings world and what is happening in 2016 and beyond.
Welcome to my new and more in-depth article on what is happening in the world of lettings this year.

We kick off with a look at the recent study the Association of Residential Letting Agencies (ARLA) and the National Association of Estate Agents (NAEA) compiled with the Centre for Economics and Business Research (CEBR) – the new Housing 2025 report.

The report concludes that buying a house is, I’m afraid, going to get further out of reach for many and unfortunately rents are set to continue to increase. With the average house price currently around £280,000, the Housing 2025 report predicts house prices will increase by 50% of their current value by 2025 – reaching an average price of £419,000. It’s even worse news for those living in the capital, as house prices are expected to nearly double in the next decade in London, rising from £515,000 to £931,000.

The rise of rental costs will mean that for those planning to enter the rental market in the next few years the news is just as bleak. Rents are predicted to increase by 27% from a current UK average of £134 per week to £171 in 2025. Again, those living in London will be worse off as they’ll need to pay 34% extra in rent per week by 2025, an increase from the current average of £234, up to £314.

Lower homeownership rates amongst the working age population (ages 16 to 64) and the ageing of the baby-boom generation will continue to drive a decline in the proportion of UK households that own their own home. Currently around 62% of the working population own their own home; the ARLA and NAEA Housing 2025 report predicts this will fall to 55% in the next ten years. A declining homeownership rate will boost demand for rental properties, and drive house prices up even more. The Housing 2025 report also predicts the proportion of private renters in the UK will increase from 20% of households in 2015, to nearly 29% by 2025.

This is all bad news for those looking to get on to the housing ladder and we can only hope that the Government keeps its promise to continue to build and allow more land to be made available so these figures aren’t so horrendous as they currently seem.
As someone who has been in the property letting industry for over 25 years I have never seen the rise in rents and house prices quite like they are now. I can almost see why the government wants to put the brakes on it all a little with trying to dissuade small time investors entering the market with cuts in tax allowance (coming in 2017) and the 3% stamp duty charging (coming in 1st April 2016) .
The problem I see is without these investors I really hope that this housing crisis can be quelled enough that anyone who wishes to Let or Buy can, but I am not so sure that for some staying with Mum and Dad until there are into their 30’s or older maybe the norm in years to come.
The start of this year at Pennington we have seen a massive increase in applicants looking to rent – which is usual for January – but we just don’t have enough available property to supply the demand and it is pretty much the same throughout the East Anglian region. The country therefore needs would-be investors even if they are going to just make a little less profit from doing so, which will surely be made up by the increased price if they decide to sell in the future.

In the coming weeks I will look at what is coming later in the year in relation to the seemingly huge amount of legislation in the property letting market. I will also keep you up to date with topical ARLA news which will be of interest too.
As always if you require any assistance on any letting advice or any of my article content please do not hesitate to contact me and if you are interested in the full ARLA & NAEA Housing 2025 document please e-mail at robert@pennington-online.co.uk and I will e-mail you a copy.
Until next time.