The latest edition of our Cartus UK MarketWatch provides those involved in the UK relocation process with an up-to-date view on the current residential sales and rental markets. As we start the New Year, January’s MarketWatch looks at what the UK property experts forecast for the months ahead:
What the experts say: the UK rental market
• Property consultants CBRE anticipate ‘significant’ rental growth this year, compared with 2014. Buy-to-let landlords are expected to begin investing in properties outside of London, in areas of the south east that are commuting distance to the Capital.
• Over the next 12 months, rental prices may increase by approximately 2.5% across the whole of the UK, according to the Royal Institution of Chartered Surveyors.
• The outlook for the UK rental market ‘remains positive’, largely due to current trends in the residential sales market. These include high house prices that prevent would-be buyers from getting on the property ladder, a constrained mortgage market, and the unchanged pace of house building. (Home Let)
What the experts say: the UK sales market
• Available housing stock will be ‘crucial in determining the trajectory’ for property prices, says Nationwide Building Society.
• The UK Treasury has revised its earlier forecast for price growth and now reports property prices may rise by 7.4% in 2015, although once inflation is factored in, the increase will be far more modest.
• Halifax expects a further moderation in house price growth over the coming year, with prices nationally predicted to increase in the range of 3% to 5% in 2015.
• Another possible trend this year, according to Rightmove, is that London will not be the ‘price-rise powerhouse’ it was in 2014. Buyers will instead begin to look for properties in regions outside the city, which are still within a commutable distance. This will create a ‘ripple effect’ and may lead to a price increase for properties in areas of the south east.
• The UK Government cut Stamp Duty Land Tax in December. Aimed at making payments fairer, these tax cuts are welcomed by many experts. The Council of Mortgage Lenders state that the ‘vast majority of mortgaged transactions will benefit from lower tax as a result of this move’, and Nationwide predicts the changes will ‘stimulate’ activity in the housing market. You can find out more about the Stamp Duty changes in our Mobility Insights: Stamp Duty Reforms.
• In Scotland, the new Stamp Duty Land Tax rates will apply until 1 April 2015, when the proposed Land and Buildings Transaction Tax (LBTT) is set to replace them. Although the legislation is yet to be passed, the draft Scottish budget for 2015/16 proposes that the first £135,000 of a residential property transaction would be free of LBTT; a 2% rate would apply to the amount between £135,001 and £250,000; 10% to amounts between £250,001 and £1 million; and 12% to any amount above £1 million. Given that several other cost elements relating to property transactions already vary within the UK, this in itself is not a major change. However, unlike Stamp Duty, where an employer/relocation company can buy a relocating employee’s house under a guaranteed homesale programme, at this stage there appears to be no exemption from LBTT, which could add an additional cost to companies. We expect further information to be made available on LBTT in the run up to 1 April 2015 and will communicate this when we receive further clarification.
What the experts say: external factors
• The upcoming general election in May 2015 will bring ‘some uncertainty’, which may influence decisions made by prospective buyers and sellers, says CBRE.
• Halifax is also ‘cautious’ over the potential effect the general election may have on the UK property market.
• Encouragingly, Nationwide states that should the economy and labour market ‘remain in good shape’ and mortgage rates do not rise too rapidly, then ‘activity is likely to regain momentum in the months ahead’.
Although these forecasts provide us with a brief outlook of what the experts predict will happen over the next 12 months, such predictions should be treated with caution. They can often be overtaken by unexpected national and global events or trends.