Welcome to our autumn newsletter 2021, we hope you enjoy!
Landlord Broadband hopes you enjoy our autumn newsletter, 2021 edition. Read on for the latest industry and customer market news regarding quarter 3. If you would like to read our last newsletter, follow the link here.
The finance world has been as busy as ever since our last newsletter. As of October, stamp duty thresholds have returned to their normal rate. This has meant that the growth in house prices has ground to a halt. There has been only 0.1% growth in September, compared with 2% growth in August. What does this mean for the property market? It is likely that there will be a period of slower growth in house prices. This will be a sharp contrast to the 13% growth seen since the beginning of the pandemic. (The Guardian).
In an exciting development, Lloyds bank has announced its entry into the property market under the brand ‘Citra Living’. This is in attempt to diversify income streams as interest rates remain low. Its aim is to acquire over 50,000 properties over the following decade, which would make Citra Living larger than property giant, Grainger Plc. With branches of the business already focused on mortgage lending, Lloyds hope that existing market knowledge may give them an edge. However, they plan to focus on building properties from scratch, to leave existing property for those trying to get on the property ladder. Their first development in Peterborough was recently completed. (Financial Times).
In more contentious news, according to analysis by a national accounting group, the London commuter belt is a hotspot for tax avoidance among buy-to-let landlords. Ilford had the highest proportion of landlords who admitted to underpaying tax on their property income, followed by Slough. The information was found as research attached to HMRC’s ‘Let Property’ campaign. It encourages people to declare undeclared tax and warns them of the consequences of not doing so. (Property Reporter).
It is predicted that now the stamp duty holiday is over, PropTech will be key for Estate Agents’ success. Despite the property market slowing down, transactions are expected to stay consistent for the rest of the year. Automation will be key to confront the challenges created by this. AI and PropTech may do small tasks, or be large solutions for large problems. There are hundreds, if not thousands of PropTech solutions available for agents, and the key to making the most of them is to not be afraid to use them! (Property Reporter).
The PropTech company Goodlord has acquired the FinTech platform, Acasa, which is designed to help tenants split their bills. Acasa is currently used by 200,000 tenants and donates 1% of its revenue to charity with an aim of eradicating homelessness. Acasa will be integrated into Goodlord’s current offering, to add value for users of the platform. (Silicon Canals).
The UK government has released its plans to drive down the cost of clean heat. They are aiming to make replacing their old heating systems more attractive. This is so that tenants and landlords are willing to have low carbon heating installed. There is a Boiler Upgrade Scheme worth £450 million in place as part of a wider £3.9 billion to decarbonise heating and buildings in general. The aim is for all new heating installations to be low carbon by 2035. Furthermore, the official Net Zero Strategy has been released. (Gov.UK).
This quarter has also marked the end of the Stamp Duty holiday. The temporary reduced land tax rates has ended. From October 1st, those purchasing land above £125,000 have had to pay stamp duty. This is unless you are a first-time buyer purchasing a property under £300,000. (BBC).
As always, it’s been a busy few months for landlords! As of the beginning of October, notice periods for Section 21 and Section 8 have returned to pre-pandemic levels. While this may be welcome news for landlords with elevated levels of rent arrears or other problems within their properties, there are still backlogs within the courts and sustaining the tenancy if possible, should be prioritised. (NRLA).
A controversial issue from the past quarter, is the trend in Landlords opting to advertise their properties as short term lets. This is due to the increase in those opting for staycations that has continued over the past months, particularly in seaside towns. In places such as the Isle of Wight, there has shown to be an 82% decline in available housing stock. As a result, there has been an increase in competition for tenancies. This is a trend that may decline going forward, however, as international travel becomes more accessible and the demand for UK-based short term lets may decrease. (Property Reporter).
Finally, in recent months, Michael Gove has become the new housing secretary in a cabinet reshuffle. The NRLA ‘welcome Michael Gove to his new position and look forward to working with him to ensure the rental market works for responsible landlords and tenants alike.’ (NRLA).
Build to Rent
The Build to Rent market experienced a subdued quarter 3 this year. There has been a 76% fall in investment compared to the same period in 2020 (Property Investor Today). The reduction is thought to be caused by continued travel restrictions, which have slowed stock uptake from international investors, and labour and material shortages. However, despite these challenges, we can look forward to a stronger quarter 4. CBRE are anticipating £2.9bn worth of transactions, expected during final months of this year.
New entrants dominated the market in quarter 3. Singapore’s CDL Hospitality trust marked their entrance into the UK BTR market with a £73.3m deal with Fiera Real Estate and Packaged Living in Manchester (Fiera Real Estate). The planned development will be known as ‘The Castings’. It will comprise of 25 storeys of 1, 2 and 3-bedroom apartments expected to be completed in quarter 2 of 2024. In addition to this, BMO successfully agreed a £40m forward funding deal for 258 flats at Hughes House in Liverpool (Property Week).
Looking ahead to quarter 4 we can expect to see a shift in investments. This shift will be away from the capital in favour of more affordable regions such as the Northwest and Midlands. This change will be in conjunction with a shift in target audience. Investors will focus on catering to the growing family rent market over the more conventional young professional group. Another development of interest is the increasing importance of quality internet in BTR accommodation. A recent Wise Living survey found that 85% of tenants want instant connectivity and superfast Wi-Fi. Get your free assessment today!
The PBSA market has had a strong quarter 3. PBSA has maintained its reputation as the ‘go-to alternative asset choice for investors’ (PBSA News). Noteworthy deals include Mapletree Investment’s £165m acquisition of a 917-bed portfolio across Exeter, Bristol, Leeds, and Nottingham. The Study Inn Group also contributed generously to the sectors growth during quarter 3, agreeing to facilitate a £30m redevelopment program of Reynard House in Leicester, which will bring 267 new beds to De Montford University’s growing student cohort (PBSA News).
This strong performance looks set to continue into quarter 4, with new research from Cushman & Wakefield forecasting up to 115,000 new beds currently expected in the national development pipeline (with 58% of these already having secured planning permission).
In other news, the National Student Housing Awards, which took place in September, highlighted ‘Fresh’ as the best private halls provider of 2021. The award was based on the highest overall satisfaction ratings chosen by residents. Fresh were also recognised for their brilliance in 7 further categories and had 23 team members nominated as Student Accommodation Hero’s (Fresh Student Living).
There is legislation across the UK to tackle the emerging second home crisis. Reports suggest that residents have had to resort to living in tents due to the influx of second-home owners (Nation.Cymru). The easing of COVID-19 restrictions is undoubtedly a large cause of the influx of second home owners. This same crisis was responsible for displacing many key workers during the pandemic. Locals feel as though they have been ‘priced out’. Second homes impact the affordability of local homes, preventing people from getting on the property ladder. The Welsh government implemented their three-pronged attack and increased taxes so that second-home owners make a ‘fairer contribution’. Subsequently, many second-home owners have begun to sell off their stock.
England’s government has yet to address the situation. According to the last English Housing Survey, in 2018/19 there were 772,000 households that owned a second home. The majority of these are in the UK. Many worry that this may exacerbate the already existing housing crisis where there is a lack of new housing available. The Scottish government has asked for views on a proposed licensing scheme for short-term lets. The Housing and Planning Committee has acknowledged the economic benefit of such housing, but also the need to look-after their communities (Scottish Legal). This will help to inform possible legislation in the future.
The displacement of people and families due to the second-home crisis is especially poignant against the backdrop of rising homelessness after the COVID-19 housing schemes ended. The end of Everyone In has led to panic that homelessness will continue to rise, and the support offered during the pandemic will cease. UK Parliament states that stakeholders are urging the government to address issues. These issues include sustainable funding for homelessness, affordable ‘move-on’ accommodation for rough sleepers and support for people with immigration statuses that prevent them from accessing public funds (House of Commons Library).
Furthermore, with the second-home crisis, there is even less homes on the market. According to Inside Housing, the building of housing association homes has decreased by a fifth. As a result, there is a call to build more affordable homes. The Scottish Government aims to deliver 110,000 affordable homes by 2031 according to the Programme for Government 2021/22.
According to the Welsh government’s ‘Social landlord housing sales: April 2020 to March 2021’, there has been a 50% decrease of sales since 2018/19. This may have been caused by the end of the Right to Buy schemes. This once again indicates that the affordability of housing is not in line with what most people can afford without additional help.
The government has released a study on social housing decarbonisation, revealing the views of social housing providers on the matter. It was found that just over half of the providers found that tenants did not refuse retrofitting work. They also found that improving energy efficiency is not of the greatest importance to social housing providers to improve their stock, but it is something they plan to address in the future.
Meet the Team
“Hello, I’m Izzy, I started working as a Marketing Lead at Landlord Broadband in September and fit working around my BSc Marketing degree at the University of York. I currently look after the Build to Rent and PBSA sectors and I’m really enjoying building up my knowledge of these ever-evolving markets. When I’m not at work or University I love cooking, writing new recipes for my food blog and learning new photography techniques at photography society.”
Thank you for reading our autumn newsletter 2021 edition
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