The latest lettings and sales market snapshot from the Royal Institution of Chartered Surveyors has prompted a warning from a leading business analyst.
Today’s RICS report says that yet again, its surveyor members saw more tenants and fewer landlords in May, as higher interest rates persuaded more buy to let landlords to sell up.
Sarah Coles, an analyst at business consultancy Hargreaves Lansdown, says: “Reports from the agents read as increasingly desperate cries for help, as the imbalance in the market gets worse with each passing month.
“Landlords have been selling after concluding new legislation was too expensive to comply with, and they’ve now been joined by a swathe of buy to let lenders, who realise that, once they remortgage, higher rates mean the maths no longer adds up.
“Two thirds of agents say more buy to let landlords are trying to sell. At the same time, more would-be-first-time-buyers are likely to sit things out for a while, to see what happens next to prices and mortgage rates.
“They may well be joined by owners who decide to sell and rent for a while. This is likely to lead to a surge in demand, and make it even more difficult to find an affordable rental property.
“Rents are rising rapidly, and RICS expects these increases to average six per cent in the coming years. Given that rent absorbs a far bigger chunk of people’s incomes than mortgages, these hikes will add insult to injury. It’s going to make it even more difficult for renters to stay on top of their finances, let alone to get a property deposit together.”
The sales market in May had challenges too but was less dire, says RICS.
Buyer demand, house prices and agreed sales fell again – although not as badly as previously.
New instructions were up for the first time since early 2022. The average agent has 38 properties on their books, close to the long-term average of 40.
Coles says: “May was the calm before the storm, and even that was pretty dreary – with demand, house prices and sales falling.
“Mortgage rate hikes in the past two weeks will pile on more misery for the property market in the months to come, depressing demand and stifling sales. But it’s not just sellers who face a wretched summer, rising rates will also bring more grief for renters too.
“… Buyers were stymied by a toxic combination of runaway inflation and higher house prices, and they were concerned about what might lie ahead.”
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As we all know on these comments…. This still has a long way to go 🫤 . What a mess 👎🏻
'Given that rent absorbs a far bigger chunk of people’s incomes than mortgages, these hikes will add insult to injury.'
I am far from convinced that this is generally the case. Rents are going up certainly but to claim that the rent is more than an equivalent Mortgage needs careful scrutiny. My rents are way below the cost of a Mortgage based on property value.
The problem for renters is than when you add in the repayment part the mortgage jumps way above the equivalent rent.
You also pay for all the maintence, insurance, repairs, possibly management fees, agents fees, etc etc, on top of your mortgage. Your tenant just pays rent, end of. So no good reason why rents should be lower than a mortgage when you weigh up all your additional costs.
You also can have eye watering amounts of stamp duty and usually a big refurbishment cost on moving house, neither paid by renters.
The only realistic comparison should be the short term SVR on 100% of the property value plus insurance and an uplift of about 50% to cover repairs and maintenance and amortisation of upfront buying costs and eventual selling costs.
By and large tenants couldn't afford to buy the property they rent and are getting a bargain.
Yes I never bought a property on a repayment Mortgage that paid for itself not a hope it always had to be subsidised from other income.
We were always taxed on the repayment portion of the loan but now it seems it’s all taxed with the introduction of Section 24 taxing the interest as well so how could a buy 2 let rent come anywhere near the cost of a repayment loan, and especially not in London where the property costs 3 times more but is in no way reflected in the income.
LISTEN UP GOVE!
If the Government break the housing market, it might get them to reconsider, however it will be too late by then.
These figures are only going to get worse as there is a lag between the figures and what is actually happening right now. The figures therefore cannot reflect now.
IMO we still have a ways to go, but hopefully this will only be months and not years, as was the case in 2008.
Though I am selling I will not be bringing anything to the market place until next year.
The forecast for interest rates next year is 4.25%, we shall see! In my case fingers crossed.
I am looking at re-mortgaging (around August onwards) if any good deals still out there then and for the first time doing a tracker.
"If the Government break the housing market, it might get them to reconsider, however it will be too late by then." They have broken everything else in our society so why stop at housing. NHS, Justice system, law enforcement, care for the elderly, education, etc. Is there any aspect of state funded provision that is better than 12 hears ago? As they say ' there is no situation that cannot be made worse by government action'
When you sell you are out no way back c/gains take’s the lump out then not enough left to buy anything so we are abused and held to ransom.
I have no desire to go to foreign parts I have met them all here and wonder why they came.
Please sign the petition:
"Reverse provisions in Renters Reform Bill to remove Assured Shorthold Tenancies"
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"Reverse provisions in Renters Reform Bill to remove Assured Shorthold Tenancies"
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It is a UK Government and Parliament petition.
Have signed, hope it makes a difference!
Go to
petition.parliament dot uk/petitions/638746
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