Yorkshire property market update and ideas on how to solve the rental crisis

The future of the property market is notoriously hard to predict and none more so than now when forecasts range from dire to a relatively small slippage in values.Estate agents tend to talk the market up because it thrives on confidence but the best and longest serving are often right.Following the recent Halifax house price index report, which reported some resilience, Mark Manning, MD of Manning Stainton, says: “It’s no surprise to me that Halifax has reported further resilience in UK house prices, which rose 0.8 per cent in March.“It signals the beginning of the busy Spring and Summer months, with the volume of new property coming to market continuing to climb for us and an increased number of new sales agreed by our branches, between 16 per cent and 23 per cent up on the same month in 2017, 2018 and 2019.

“This highlights a key point, which is that whilst things are not as they were through the recent boom, there is still an excess of demand out there, fuelled by mortgage lenders who continue to support the housing market.”

He adds that first time buyers are now prevalent and make up a quarter of all buyers after struggling to compete during the boom and while mortgage rates are now higher, house prices have moderated.

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“Prices have fallen by around three per cent since a year ago across our region but this is nowhere near what most commentators were saying at the end of last year with 10 to 20 per cent corrections forecast,” says Mark.

Property market updateProperty market update
Property market update

“What we have seen is a short, sharp adjustment in prices, which will soon settle if inflation continues to come under control and interest rates remain around the current level.”

Average mortgage rates have also been edging down. The average five-year fixed deal with a 15 per cent deposit was 4.63 per cent in March, down from 5.89 per cent in October.

While it is steady away in the selling market at the moment, the rental market continues to cause concern. Leeds estate agent HOP has written an open letter to Michael Gove, Secretary of State for Levelling Up, Housing and Communities, urging the government to address the chronic shortage of homes to let, which is driving rents up and making life increasingly difficult for tenants.

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Research from estate agency data specialist, TwentyEA, shows that during 2022, supply of rental homes reduced by eight per cent year-on-year and by 25 per cent since 2019.

The letter follows a consultation with HOP’s landlord clients, tenants and other industry professionals working in the private rented sector.

As well as addressing the challenges, the letter offers recommendations on how the government could slow the exodus of landlords.

HOP, which manages one of West Yorkshire’s largest rental portfolios, expects rents to increase by another seven per cent in 2023, which follows a 10 per cent rise in 2022.

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The company suggests that the government removes the three per cent stamp duty on the purchase of additional homes and instead charges the levy to landlords selling additional homes, which could incentivise landlords to purchase new buy-to-let properties.

It also believes that landlords should be incentivised to transfer rental properties into limited company ownership by removing the three per cent stamp duty levy for a 12-month period.

This, it says, would enable landlords to pay tax on profit rather than revenue and would help to professionalise the industry.

HOP is also calling for more certainty over upcoming rental reforms and the simplifying of the Section 8 eviction process.

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This would enable landlords to evict bad tenants and ease their concerns about the removal of Section 21, which enables private landlords to repossess their properties without having to establish fault on the part of the tenant.

Luke Gidney, managing director at HOP, which has offices in Leeds city centre, Horsforth and Pudsey, says: “Legislation, red tape and tax changes that were all designed to make buy-to-let properties less appealing to landlords, have had a bigger impact on the rentals market than anyone imagined.

“We are now in a position where demand for rental property is higher than it’s ever been and tenants are in fierce competition for available properties and are paying record rents, against a backdrop of high energy bills and the cost of living crisis.

“Plus, tenants now often find themselves stuck where they are living and are moving less regularly, for fear of not being able to secure another home.

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“More housing stock in the private rented sector would give tenants more choice and ease the burden on rents.

“We hope the Government will listen to the views of the industry and our recommendations and take steps to ease the problem.”​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​