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TODAY'S OTHER NEWS

Capital appreciation boost for landlords as asking prices soar again

It looks as if landlords have enjoyed further capital appreciation with the latest housing market index showing still-rising asking prices for homes on sale.

Rightmove reports today that the price of property coming to market hits a new record high for the third consecutive month, up by 1.6 per cent in recent weeks.

Despite growing concerns about interest rate rises and the cost of living crisis, Rightmove reports that all regions and all market sectors have hit record price highs, for only the second time since 2007.

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The average increase in asking prices over the past three months now totals £19,000 which is the largest seen in any three-month period since the portal’s records began over 20 years ago.

Some 53 per cent of properties are selling at or over the full asking price, again the highest level ever seen; meanwhile the number of transactions is now running 21 per cent higher than the more normal pre-pandemic 2019 market. 

Tim Bannister, Rightmove’s director of property data, comments: “With three new monthly price records in a row, 2022 has started with price-rise momentum even greater than during the stamp duty holiday-fuelled market of last year. 

 

“While growing affordability constraints mean that this momentum is not sustainable for the longer term, the high demand from a large number of buyers chasing too few properties for sale has led to a spring price frenzy, a hat-trick of record price months, and the largest price increase for a three-month period Rightmove has ever recorded. 

“The strong momentum has carried over from last year and, combined with the impetus of the spring moving season, has delivered the quickest selling market we’ve ever seen. The high speed of the market and competition among buyers when making an onward move will be deterring some owners from putting their homes up for sale. 

“However, if you can secure both a quick sale and a quick purchase then it’s a lot less stressful than the uncertainties of a slower market when finding a buyer for your own home can drag on for months or not happen at all. Over 125,000 new sellers have taken advantage of the great sellers’ market this month, but more are needed in all areas and in all property sectors to meet high buyer demand.”

 

Bannister continues: “The economic headwinds of strongly rising inflation and modestly rising interest rates are being kept at bay by the even stronger tailwind of property market momentum that has carried over from last year. 

”2021 saw four consecutive monthly price records from April through to July and I would not bet against that being bettered this year as we are already at three consecutive records in April.

“There are some early signs of an easing off from the frenetic pace of price rises, and buyer enquiries to agents are down by 16 per cent on last year’s stamp-duty frenzy. However incredibly, buyer enquiries are still 65 per cent above the more normal market of 2019 and the number of sales agreed is up 21 per cent. 

“While there is growing economic uncertainty, our current market statistics show there is greater certainty that your property will sell more quickly than ever before, and likely at a record price. It can’t and won’t continue like this, but with the demand and supply imbalance being so out of kilter, it looks like any substantial slowdown will be gradual in coming and be a soft rather than hard landing. 

“It seems likely that the supply/demand mismatch will remain for at least the rest of this year. Even with some economic uncertainty, where you live and your home is such a fundamental decision for people that it will remain a priority for many.”

Want to comment on this story? If so...if any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals on any basis, then the post may be deleted and the individual immediately banned from posting in future.

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    The problem with selling is the CGT. I imagine a few of us have properties that we would quite like to sell but won't or can't with the current level of CGT.

    In some cases where landlords have remortgaged the mortgage plus early repayment penalty plus CGT plus selling costs are more than the house would sell for.
    In cases where the landlord hasn't remortgaged properties they bought pre 2005 they would often release more cash by remortgaging than they would retain by selling and paying CGT plus selling costs. They'd also still have the house and income.

    In the South CGT can easily be well over £75000 per property. In London much higher than that.
    Bearing in mind we have already paid SDLT, higher rate income tax on the rent we receive and VAT on a huge quantity of goods and services during our period of ownership charging a higher rate of CGT than for any other asset seems like pure greed.

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    My wife and I have 3 or 4 where the CGT would be over £100k,and then if we get hit by the Clapham omnibus the following week,another 40% is wiped off

     
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    I take the point with CGT, but if the EPC regs come in and your property is an E or D, you will have a big bill to pay somewhere, either in renovations or selling fees/CGT, it really does depend on where the landlord is in his or her life planning. I am close to retirement and am willing to take the CGT hit given how much it will cost me to get my properties up to a C. In the end the properties will be sold by someone, if you pass away there is no guarantee your next of kin will want to be a landlord. I am looking at enjoying my latter years without the need to look at costs, so selling is for me……. All depending on this useless government’s ability to pull their finger out and sort out the new EPC rules!

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    Frustrated at the BS coming from people who should know better. Declaring record increases without taking account of inflation is lazy at best and/or incompetent.

    Once you factor in CGT and inflation, the story is very different. We all know inflation is around 10%, so any rise is only a rise in real terms if it’s above 10%. Much of the increases coming now, are due to pent up activity because the market has been in the doldrums since 2008, and Brexit and covid have put the brakes on.

    As for EPC, it’s a big black cloud hanging over property that is causing much of the issues with shortage of supply of rental properties. When people complain about empty flats above shops, they don’t realise, most of these properties have very low EPC ratings and where as in the past, investors would have been happy to buy and convert them into rentals. Now the costs to get them to EPC C make the prospect unworkable.

    In the future, because of government stupidity - there will be hundreds of thousands of needlessly homeless people and hundreds of thousands of needlessly empty properties because the government wants to hit a net zero target which nobody asked for.

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    The loony Greens asked for it and deserve all they get.

    As ever with them, it's dogma before common sense.

     
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    Jo. That’s very true makes far better sense. However the problem that they now have created is Section 24, so it would be necessary to have a Company for this purpose also bear in mind it will belong to the Company which might have other implications.

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    Well yes the value of property tends to go up (except if you are really unlucky as I was between 1989 and 2007). It's called inflation. Problem is that doesn't translate into cash in the bank until you sell (when of course you pay CGT) or you remortgage. At that point you can work out whether you got out more than you put in, allowing for inflation. It's all part of the "rich greedy landlords" rhetoric. Tenants and should ask themselves, do you want your landlord to be struggling financially? Because if they are then less chance of repairs being done, and no chance of any flexibility on the rent in the event of a pandemic.

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    sad Landlords, yes I remember those years as well as 1980.
    Suppose you bought for letting in 2007 in West London a Terraced for £300k the price has almost doubled £600k but so has everything else, where’s the profit it tax on inflation. Taxes will have been paid on all income in the intervening years and absorbed a great deal of others costs and hard work incl’ the extra you paid to Bank in mean time. The value of the pound has halved so you are paying c/gains on one half but if everything had stayed the same you’d be getting back a solid £300k and no tax, so you are paying tax on the lost £ value or so called inflation.

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    We now have an unsustainable economy over burdened by Regulators & Tax. As a Landlord to get rid of Rubbish in Ealing invariably you have to get a Skip and its usually the Tenants rubbish. That costs you £106.00 to the Authorities for a standard Skip. The Skip hire is £280.00 + £56.00 VAT + £50.00 licensed = £386.00.
    Come on now Ealing this is not Cricket, when I Built my first House in Ealing the Skips cost me £7.00 each from John Swann, Sunbury with a proper Receipt. Is it any wonder you are full time collecting fly tipped rubbish in the Borough you greedy people.

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    In Norwich it cost me £30 all in, Christine Skips, an owner driver with 1 skip lorry, in the 80s/90s , today I have my own 3.5 ton trailer and waste licence, still costs to get rid of rubbish but at least I can keep those costs to a minimum.

     
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