The New Year is set to bring significant changes to the property market, with buyers rushing to complete transactions ahead of anticipated stamp duty changes. According to Propertymark’s latest Housing Market Insight report, this surge in activity will also coincide with more landlords selling up.
Despite rental prices remaining relatively stable, many landlords are finding it increasingly difficult to break even. Rising mortgage rates and escalating costs are pushing them to raise rents, but even these increases may not fully cover their expenses. As a result, the pressure on landlords is growing.
Meanwhile, demand for housing continues to outstrip supply. The report highlights that, on average, each member branch is seeing around nine applicants for every available property. This ongoing imbalance between demand and supply shows the continuing challenges in the market, even as the number of landlords exiting increases.
Landlords selling up
According to Propertymark’s latest report, the rental market showed some signs of stability in October 2024, despite ongoing challenges for landlords and tenants alike. Around 55% of member agents reported that rents had remained generally static during this period, indicating a level of steadiness in the market. However, 17% of agents observed a decline in rental prices, while nearly 27% reported an increase. This mixed picture suggests that while some areas may be experiencing rent stability, others are still seeing upward pressure on rental prices, possibly driven by continued demand outstripping supply.
Despite the relatively stable rent levels, the report highlighted a concerning trend with rental arrears. Although there was a slight dip in arrears in October, the numbers remain alarmingly high. In fact, 35% of adults in the UK reported that it is either “very or somewhat difficult” for them to afford their rent or mortgage payments. This statistic reflects the ongoing financial pressures faced by many renters, particularly as the cost of living continues to rise and household budgets are stretched.
In the East of England, a Propertymark agent shared concerns about the potential impact of these financial strains on landlords, many of whom are reconsidering their position in the market. According to the agent, numerous landlords are contemplating selling up and exiting the lettings market as they face mounting challenges. Despite the fact that the Renters’ Rights Bill is still in the early stages of its passage through Parliament, the agent has already been fielding calls from landlords eager to exit the market before any further regulatory changes take effect. This suggests that the uncertainty surrounding future regulations, such as rent control measures or changes to eviction processes, is prompting many landlords to re-evaluate the viability of their investments.
With the pressure from rising mortgage rates, increased costs, and potential legislative changes, the sentiment of landlords wanting to sell is likely to intensify as we move into the New Year. The report paints a picture of a housing market that is facing significant disruption, with both landlords and tenants facing challenges that could reshape the rental landscape in the coming months. As more landlords consider leaving the market, the impact on rental availability and pricing may be felt across the country.
Lack of support for investors
Nathan Emerson, the chief executive of Propertymark, has highlighted that while there are some positive signs emerging in the lettings market, the ongoing imbalance between supply and demand remains a significant challenge. He noted that agents have reported a healthy number of rental properties available, which suggests that the market is not completely devoid of supply. However, despite this, widespread rental increases have not been a consistent feature.
This stability in rental prices has been a welcome shift, especially when considering the pressures landlords face due to rising mortgage rates and other increasing costs. These factors have forced many landlords to raise rents, often just to cover their expenses and break even. As a result, the strain on landlords to remain profitable continues, even as the market shows signs of stability in certain areas.
Mr Emerson further emphasised the ongoing concerns about the lack of support for investors in the current market environment. Despite the availability of properties, the supply still fails to meet the increasing demand from renters, creating a persistent strain in the lettings sector. The demand continues to rise, but the static levels of available rental stock only exacerbate the issue, making it increasingly difficult for renters to find suitable properties at affordable prices.
This issue of undersupply has been one of the most pressing topics in the rental market, and it appears that unless more support is provided for landlords and investors, the imbalance will continue to impact the market. As demand from renters rises, it is crucial that measures are introduced to support landlords and encourage further investment in the sector.
Buyers rush to beat stamp duty change
In October 2024, the residential market saw a significant increase in new prospective buyers, reaching a two-year high with an average of 100 new buyers registered per member branch. This surge in demand is indicative of growing interest, as buyers rush to make purchases ahead of expected stamp duty changes in April 2025.
The report also highlighted that the number of UK residential sales transactions in October 2024 was 23% higher compared to the same month in 2023. This increase is partly driven by the impending changes to stamp duty thresholds, which have prompted many buyers to act quickly in order to complete their transactions before the new rules take effect.
From April 2025, stamp duty thresholds in England will be reduced. For first-time buyers, the exemption threshold will drop from £425,000 to £300,000. Similarly, for standard residential properties, the threshold will fall from £250,000 to £125,000. These changes are expected to have a significant impact on the market, particularly for those looking to save on their property purchases.
Mr Emerson, chief executive of Propertymark, commented that as the New Year approaches, the sales market will likely experience trends not typically seen during the winter months. Buyers and sellers, particularly in England and Northern Ireland, are expected to push their sales and purchases through in an effort to save potentially thousands of pounds before the stamp duty changes are implemented in April 2025.
With affordability improving for many across the country, the pace of market activity has also increased. While prices may fluctuate to meet the evolving needs and budgets of home movers, Mr Emerson anticipates that the market will remain healthy and adaptable throughout 2025.
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