General election 2024: What does each party’s manifesto say about housing?
We've compared the housing policies of the major political parties so you don’t have to.
The general election is nearly here, and all the major political parties have now released their manifestos. Of course, we’re particularly interested in what each political party has to say about housing, but there’s a lot to compare and get your head around.
That’s why we’ve done the hard work for you - breaking down the housing policies of the Conservatives, Labour, and the Liberal Democrats so you can easily compare their pledges in each area.
What are the political parties’ policies on housing?
Policy Area |
Conservative |
Labour |
Liberal Democrats |
New Homes |
1.6 million new homes over the next parliament. |
1.5 million new homes over the next parliament. |
380,000 new homes per year. |
Social Housing |
Renew Affordable Homes Programme for developers. |
Significant increase in social and affordable housing, focusing on social rented homes. |
150,000 new social homes per year, giving local authorities power to end Right to Buy. |
First-time buyers |
Stamp duty exemptions; new Help to Buy scheme; mortgage guarantee scheme. |
Comprehensive mortgage guarantee scheme; first chance for first-time buyers on new-builds. |
Rent payments to progressively give social tenants ownership over 30 years via a Rent to Own model. |
Renters |
Complete Renters Reform Bill and ban no-fault evictions. |
Ban no-fault evictions; extend Awaab’s Law; empower renters to challenge unreasonable rent increases. |
Ban no-fault evictions; introduce national register of landlords; set three-year default tenancies. |
Leasehold reform |
Cap ground rents at £250 and end the misuse of forfeiture. |
Reform the leasehold system, ensuring commonhold becomes the default tenure. |
Abolish residential leaseholds and cap ground rents. |
Homelessness |
Continue plans to end rough sleeping. |
Develop a new cross-government strategy to end homelessness. |
End rough sleeping within the next Parliament and scrap the Vagrancy Act. |
Key takeaways
- All three parties pledge to ban no-fault evictions for renters
- All three parties pledge to reform or end the leasehold system
- All three parties pledge to build at least 1.5 million new homes over the next parliament
What income do you need to buy a home in 2024?
The required income to buy a home has increased in recent years. But what does that mean in real numbers? And where is the most affordable place to buy in the UK?
Affordability is one of the greatest barriers facing people looking to buy a home. We talk a lot about deposits, but the household income needed to finance a mortgage is an equally important factor. This is because income levels are used to assess the affordability of a mortgage through the loan-to-income assessment.
First-time buyers tend to have lower deposits than existing owners who may be looking to buy a larger home. Typically, the higher the deposit, the lower the income needed to buy.
Data shows that the typical first-time buyer (FTB) takes a mortgage that is 3.3x their household income. Existing homeowners looking to move take out mortgages that average 3x their household income.
Using these average loan-to-income ratios, and the average asking price of homes for sale on Zoopla, we can calculate the household income needed to buy a home for FTBs and existing owners.
A FTB looking to buy a typical first home (priced at £250,000), with an average 20% deposit, would need an annual household income of £60,600 in order to buy. This figure is £2,400 higher than a year ago.
Those upsizing to an average-priced home currently on the market (priced at £335,000), with a larger average deposit of 35%, would need a household income of £72,600. This is £3,400 higher than a year ago.
The average UK household income is currently £33,300, according to the ONS. This means that two average earners buying together have a household income of £66,600, which is enough to buy a typical first-time buyer home. However, homeowners on the same income are likely to struggle to upsize to an averagely-priced UK home without a bigger deposit.
First-time buyers need two average salaries to buy
First-time buyers often buy with smaller deposits - 20% on average - according to ONS. To help make buying affordable, FTBs tend to look for cheaper properties. For example, the average asking price of a home chosen by a first-time buyer is 34% lower compared to the market average.
The income a first-time buyer will need in order to buy is closely linked to the value of homes in the area. FTBs in northern England and Scotland require lower earnings compared to those in the Midlands, Wales or southern England.
Those looking to buy their first home in the North East require the lowest income to buy in the UK. A typical FTB home in the region costs £120,000, which requires an income of just under £29,100 in order to buy. In areas such as Hartlepool, homes priced around £80,000 are most popular with FTBs. Although homes sold at this price point are typically fixer-uppers or small flats, the household income needed to buy these types of properties is only £19,400.
At £31,500, Scotland has the second-lowest required income for first-time buyers. And in areas such as Ayrshire, savvy folks can buy with a household income of under £20,000.
Back in England, the further south you go, the more you need to earn in order to buy. The average first home in the Midlands is priced below £200,000, meaning the required income is below £49,000. And in southern England, the average income to buy ranges between £33,900 in Great Yarmouth to a whopping £193,900 in Kensington and Chelsea.
Upsizing homeowners need an income of £72,600 to buy
Those looking to move up the next rung of the ladder will find that a higher house price will need a higher income to buy. The average asking price of a home currently listed for sale on Zoopla is £335,000. Homeowners looking to buy such a home with a 35% deposit will need an income of £72,600.
Those planning to buy an averagely-priced home in northern England need a household income between £31,400 (Blackpool and Hull) and £78,000 (Trafford in Manchester).
A homeowner upsizing to an average home in Scotland (£200,000) would require a household income of £43,300. Yet, the income needed to buy can range from £27,100 in East Ayrshire to £62,800 in the East Lothian area.
Those buying in the Midlands or Wales will typically need a household income above £54,000. However, upsizers won’t be as required to earn as much in locations such as Blaenau Gwent (£32,500), Stoke-on-Trent (£39,000), Bolsover (£46,600) and Boston (£46,600).
Upsizers in the south of the country will need a household income higher than the income of two average earners, which currently stands at £66,600. This is down to higher house values, with asking prices commonly exceeding £300,000.
However, home owners buying in smaller cities in the south may require a lower income. House prices in cities such as Plymouth (£52,000), Norwich (£54,200), Peterborough (£56,300), Portsmouth (£57,400) and Southampton (£58,500) offer more opportunities to buy on a smaller income.
Those upsizing in London will need the highest level of income in Britain - £124,600 on average. However, our analysis shows that those looking to buy an averagely-priced home in East London (Barking and Dagenham, Havering and Newham) and South East London (Croydon, Lewisham, Bexley) will need an income below £100,000.
Why are the required incomes to buy so high in 2024?
The required income to buy has increased by 4% over the last year largely due to higher asking prices and a slight decline in the loan-to-income ratio.
To adapt to this, buyers can put down a larger deposit to reduce the size of the mortgage. If this isn’t an option, a more practical solution could be to look further afield by extending your search area, or consider other types of property.
Our data shows that relatively few first-time buyers are changing what they want from a property as they balance home ownership with complex family needs. The key route to getting more value for money is to widen the search radius and consider more markets.
We find that 2 in 5 buyers in southern England are looking further than a 10 mile radius to find their next home due to the affordability pressures of the region.
Key takeaways
- The average first-time buyer (FTB) needs an income of £60,600 to buy a home - the equivalent of two average UK salaries
- An existing home owner looking to upsize needs a household income of £72,600 to buy an averagely-priced home
- The required income to buy has increased by £2,400 for FTBs and £3,400 for upsizing home owners over the last year
- The most affordable areas to buy on lower incomes are in northern England and Scotland
Rental Market Report: June 2024
The average rent for new lets in the UK is £1,226 after a +6.6% rise in the last year. Rents for new lets will rise more slowly this year, but only a major supply boost will help with rental affordability.
The average rent for new lets in the UK is £1,226 as of April 2024 (published in June 2024).
Rents have risen 6.6% in the last year, the slowest rate of growth in 2.5 years.
Key figures
April 2024 |
January 2024 |
December 2024 |
|
Average rent (new lets only) |
£1,226 |
£1,223 |
£1,219 |
Annual rental growth |
+6.6% |
+7.8% |
+8.2% |
UK rental inflation lowest for 2.5 years
UK rental inflation lowest for 30 months
The average monthly UK rent has risen by £80 in the last year, taking it to £1,226pcm.
Overall, the rate at which new lets are rising annually has now slowed to 6.6%, down from 10% a year ago.
This is the lowest rate of annual rental price inflation for 30 months (since Oct 2021) as demand slows from a high base and affordability constraints among renters mean rents can’t rise much further.
If the rental increases that took place in the last three months were converted into a yearly rate, the annual rate of inflation would be 3%.
This is the lowest it’s been for the month of April since 2021, and points to a continued slowdown in the rate of rental inflation for the rest of 2024.
Demand weakens off a high base but supply remains low
The chronic imbalance between rental supply and demand is starting to narrow but remains well out of kilter.
Demand for rented homes is slowing off a very high base as one-off pandemic factors start to recede and mortgage rates fall below 5%.
Rental demand is down 25% over the last year but competition remains high, with 15 households chasing every rental home. This is more than double the pre-pandemic average of just six which was seen between 2017-2020.
More choice of homes for renters
The average number of homes for rent per estate agent has increased by almost a fifth (18%) on this time last year, which is boosting choice.
However, the supply of homes for rent remains a third lower than the pre-pandemic period, as low investment in rented homes keeps the overall stock of private rented homes broadly flat.
The national picture of lower rental demand and a modest increase in supply is replicated across all regions and countries of the UK.
Demand is down by up to 30% across the East of England, followed by London (-28%), the South East (-27%) and Scotland (-27%).
Traditionally, more rental homes become available during spring before demand kicks in between May and September each year, and supply is currently up the most in both London (23%) and Scotland (24%).
London leads the slowdown in rent inflation
The headline rate of rental inflation has slowed modestly across most areas of Great Britain over the last year.
London has led the slowdown with average rents rising by just 3.7%, down from over 13% this time last year.
The average growth in rents across the rest of the UK outside of London is currently 8%, with the highest increases in rents are being recorded in the North East (9.5%) and Scotland (9.3%).
The underlying level of rental inflation - 3-month growth expressed on an annual basis – is lower than the annual rate of growth across all areas, pointing to a slowdown in momentum in rental growth.
In London, the underlying rate of rental inflation is negative (-1.3%) as average rents have fallen by 0.3% over the last 3 months
Rents start to fall in several cities
Rents have fallen over the last quarter across a small number of cities. This is down to rent levels for new lets adjusting to localised changes in available supply and more price-sensitive demand.
Seasonal influences are also a factor, with January to April traditionally being a quieter period before the usual seasonal upturn in rental demand between May and September.
This upturn is linked to both the jobs market and the end and start of the academic year.
Our index shows average rents have fallen slightly over the last quarter in:
-
Nottingham (-1.4%)
-
Brighton (-1.1%)
-
York (-0.4%)
-
Glasgow (-0.4%)
-
Cambridge (-0.3%)
-
London (-0.3%).
These are modest falls in the context of the recent rapid growth in rents, but this is clear evidence that rental market dynamics are starting to turn in some markets.
Rents have continued to increase across other UK cities over the last 3 months, where there is affordability headroom for rents to rise.
Rents in regional towns and cities such as Gloucester, Sunderland and Northampton have risen by up to 3% over the last 3 months.
Growth in rents and average earnings starts to narrow
Rents for new lets have been rising faster than average earnings for over 2.5 years, since October 2021.
As rental inflation slows, the gap to earnings growth, currently at 6%, is starting to narrow.
The growing unaffordability of renting should start to act as a drag on rents rising.
However, rent levels are being supported by continued strong demand-side pressures and low levels of new investment in private rented housing.
The picture varies across the country and much depends on how affordable rents are relative to earnings and the scale of the headroom for rents to rise further.
At a region and country level, the proportion of gross earnings spent on rent is at its highest level for a decade.
The rapid rise in rents over the last 3 years has worsened rental affordability. However, there is a wide variation in how much of average earnings are spent on rent.
It is not surprising that rents are currently rising fastest in the North East and Scotland, where rental costs account for the lowest proportion of gross earnings.
In contrast, London has the highest rents, which already account for a higher proportion of average earnings. That explains why rent levels here are now back to 2015 levels, having fallen over the pandemic.
Wide divergence in rent inflation across London
London is a complex and highly segmented rental market, making regional averages potentially misleading.
Rents are the highest in inner London, where there is strong corporate demand, with more renters sharing properties compared to outer London.
Rental inflation has slowed the most in inner London areas, with rents in Westminster and Tower Hamlets up by less than 2.5% over the last year and posting modest quarter-on-quarter declines.
In contrast, rents are up by over 10% in outer London areas such as Barking & Dagenham, Redbridge and Havering, where average rents are 20% below the London average.
Supply-demand imbalance unlikely to improve
Looking ahead, we do not believe that the imbalance between rental supply and demand will improve materially over the next 12 months.
Levels of new investment in the private rented sector remain low, while demand is set to remain above-average.
This means rents will continue to increase at a slowing rate.
Rental demand shows little sign of moderating
The demand drivers of rented housing show little sign of moderating significantly in the near term.
The labour market is the primary driver of demand, alongside the need for student homes and the difficulty of becoming a first-time buyer (FTB) with higher mortgage rates.
Additional pressure is also coming from a lack of affordable homes available for households in acute housing need.
The labour market has been losing momentum in recent months, and there is continued reliance on immigration to fill gaps in the jobs market.
The number of overseas students studying at British universities has also expanded, adding to rental demand across most UK cities.
Three-quarters of FTBs come from the private rented sector. Higher mortgage rates since 2022 have made it harder for FTBs to buy a home and this has kept more households in the rented sector.
There were a fifth fewer purchases by FTBs in 2023-4. The decline in mortgage rates over 2024 is leading to a recovery in FTBs but there is continued demand for rented homes from would-be buyers waiting for mortgage rates to fall further.
We expect demand for rented homes to continue to moderate slowly as one-off pandemic factors recede, but the higher cost of home ownership and a lack of affordable homes means the rented sector will continue to see continued demand on multiple fronts.
Outlook and the politics of private rented housing
The market is still on track for a continued slowdown in rental inflation to 5% over 2024. Recent levels of rental growth have been unsustainable, meaning a slowdown is inevitable.
This is being driven more by changes in demand than any expansion in supply.
On the policy front, while the Rental Reform Bill failed to make it onto the statute books, it seems likely that rental reform will return in the next parliament whichever party forms the next Government.
While changing the protections for existing renters is important, the greatest imperative is to boost the stock of homes for rent – both private and affordable - through greater housing delivery.
Only by boosting supply can we improve choice for renters and increase the chances that consumer demand will start to exert more influence over landlord decisions and the quality of rented homes.
While there has been more political focus on the challenges facing the private rented sector, true progress will only be demonstrated by political parties setting out specific plans and goals for the future of the private rented sector in manifestos.
A healthy private rented sector is vital for economic growth and a more balanced housing market.
Key takeaways
- The rate at which rents are rising has slowed down to 6.6% for new lets, down from a high of 16% in October 2021
- London is leading the slowdown, with rents rising at just 3.7% in the last year, as rents start to fall in some cities
- Competition for properties remains high, with 15 households chasing every rental home (more than double the pre-pandemic average of six)
- However, choice is starting to increase, with the average number of homes for rent per estate agent up by 18% on this time last year
- We believe the rates at which rents are rising will continue to slow to 5% over 2024
What does a general election mean for the UK housing market in 2024?
The announcement of the UK general election for July 4th 2024 has come earlier than expected—but what does this mean for the housing market?
What impact will the general election have on the housing market?
Overall, we don’t see the election having as big an impact on the housing market as previous years. This is due to there not being a huge divide in policy between the two main parties, with neither having many specifics on housing other than a focus on reforming the private rental sector and boosting housing supply. However, the number of completed sales may now fall slightly short of the 1.1m we expected for 2024.
Businesses and landlords will want to see that political parties have concrete plans - namely for boosting housing supply across all tenures and getting the right reforms to the private rented sector. This will ensure that supply is maintained while giving renters more protections.
What will housing market activity look like over the general election period?
As we run up to summer and the slower period in the housing market, the election announcement is likely to stall the pace at which new sales are being agreed to in the coming weeks.
Most buyers who are close to completing on a house will ideally want to push through and agree a sale now. Those who are earlier in the process may look to delay decisions until the autumn after the election is over.
What does the housing market look like at the moment?
The housing market has been recovering with more homes coming to the market for sale, and an increased volume of sales overall. This is a sign of growing confidence amongst sellers, even though mortgage rates remain at 4.5% to 5%.
Currently, there are 392,000 homes in the sales pipeline that all working their way to completion over 2024. This is 3% higher than this time last year, and we don’t expect to see buyers already in the process of working toward sales to pull out.
The incentive to move remains for many households - in particular for first-time buyers who are escaping rapid growth in rent costs, and upsizers who delayed moving last year when mortgage rates increased.
Key takeaways:
- People who are close to agreeing a sale on a home will want to push ahead
- Early stage house hunters may hold back on decision-making until after the election
- Activity in the housing market has been rising with more homes for sale and more homes being sold
- There are 392,000 homes currently in the sales pipeline, and we don’t expect to see buyers already in this process to pull out
Where is it cheaper to buy than rent?
A third of homes for sale are cheaper to buy than rent, with the average first-time buyer saving £93 a month on a mortgage instead of renting.
A third of homes (150,000) currently for sale can be bought with a mortgage and monthly repayments that cost less than the average rent in the same area, according to our latest research.
The average monthly UK rent is currently £93 per month (8%) more expensive than the average mortgage repayment for a first time buyer (FTB) - an improvement since last summer, when mortgage rates were 1% higher and it was cheaper to rent than buy.
First time buyers should look to urban areas for affordable homes
While some regions have more affordable homes for first time buyers than others, urban areas are the best locations to find homes that are cheaper to rent.
Oadby and Wigston, a suburb of Leicester, has the largest proportion of for-sale homes (82%) with remortgage repayments lower than the local market rent.
Ipswich in Suffolk comes second (80%) and North West Leicestershire (78%) comes third.
The majority of homes for sale in Manchester (62%), Newcastle (68%), Southampton (62%) and Sheffield (51%) are also cheaper to buy than rent, thanks to an abundance of flats - the most common property type in these cities.
This is welcome news for renters who may prefer to buy locally.
Over 40% of homes in the north and Scotland are cheaper to buy than rent
First-time buyers can find 150,000 homes (34% of the total listed) where average monthly mortgage repayments are lower than rents, assuming a 20% deposit.
The North West, North East and Scotland that have the highest proportion of these homes.
Over two-fifths of homes for sale in the North East (48%), Scotland (46%) and North West (44%) are cheaper to buy than rent with the monthly difference between the cost of renting and buying in these areas ranging between £240 and £425.
However, the availability of affordable homes is at the highest risk of falling in these regions as house price inflation has recovered earlier than in the southern regions of England.
It’s a different story for first time buyers in the south of England and the Midlands, which have a lower share of homes listed for sale that are cheaper to buy than rent.
Just a quarter (27%) of homes in the South West and a third (33%) of homes in the East Midlands have mortgage repayments lower than local rents, largely down to higher home prices in these regions, meaning that borrowing costs remain much higher.
Two in five homes listed for sale in London are cheaper per month than renting
London also has a relatively high proportion of homes for sale where mortgage repayments are lower than rents: two in every five homes listed on Zoopla would work out cheaper to buy than to rent.
This is because the gap between rental inflation and house price inflation has been greatest in London over recent years: rents are up by 26.6%, while house prices have increased by only 8.9% over the past five years.
Low price growth and higher rents ultimately means greater options for first-time buyers, although rents remain high in the capital.
Nine out of 10 homes that are cheaper to buy than rent in London are flats, which typically come with a lower price tag.
This is due to a larger difference between typical FTB monthly mortgage payments and monthly rent payments of £470 in inner London and £170 in outer London.
This is not just the case for London too - potential homeowners keen to secure a mortgage with payments below local rents should look to flats with two in three flats currently available for less than local rent in their respective markets.
Key takeaways
- A third of homes listed for sale (34%) on Zoopla can be bought with a mortgage and repayments that cost less than the average rent in the same area*
- Buying an average home with a 20% deposit on a 30-year term works out as £93 cheaper per month than renting it
- Availability is best in the North East, Scotland and North West, with over 40% of homes having mortgage repayments below rental costs
- Oadby and Wigston area near Leicester has the highest proportion of homes listed for sale that are cheaper to buy than rent
- The majority of homes for sale in Manchester, Newcastle, Southampton and Sheffield could be purchased with mortgage payments below rents
Period properties swallow £700-a-month in upkeep
New research finds that period properties cost the equivalent of a small mortgage in maintenance and upkeep.
We love a character fireplace and ornate cornice as much as the next person, but these period features can come at a price in the long run.
We’ve taken a closer look at the true cost of owning a period property - one that was built before 1919. On average, period home owners have spent more than £19,213 maintaining and repairing their home since the start of 2022.
This is nearly two-and-a-half times the maintenance cost of non-period homes since 2022 (£8,496).
In total, that works out as an extra £700-a-month spent on maintaining a period home, since 2022 - a significant proportion of the current average monthly mortgage cost of £950.
And over the whole time they’ve been in their period home - which averages 16.8 years - owners of period homes have spent a whopping £68,000 on upkeep.
What are the most common issues with period homes?
Most of the time, these maintenance costs are on fixing external elements of a period home. This includes:
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Roofing
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Brickwork
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Garden maintenance
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External walls
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Leaning chimneys
Period homeowners have spent an estimated £12,865 on these external fixes since 2022, whereas owners of non-period homes only spent £4,314 on them.
And when it comes to internal maintenance, period homeowners have spent a further £6,348, covering things like:
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Flooring
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Bathrooms
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Electricals
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Removing mould
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Upgrading insulation
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Fixing wiring and electrics.
On the other hand, those in non-period homes have only spent £4,182 on internal maintenance. It drops to just £2,915 for those who own a new-build home (built in or after 2020).
Is it worth buying a period property?
The costs of running a period home have caught many homeowners out.
A fifth (22%) say they didn’t realise how much they would need to spend to maintain, repair and upgrade their property - or they didn’t envisage any costs at all..
And two in five (39%) period home owners say the final cost was more than they had anticipated.
That’s not to say it always comes with regret. 72% of period home owners say the costs are ‘worth it’ and they don’t regret their purchase.
Many period homeowners think that older homes have more character (55%), others love the architectural style (45%) and a third (33%) say original features are a key draw.
What to check before buying a period home
Period properties require regular investment to keep them in good, working order. Be sure to look beyond simply the price of a property and factor in the ongoing maintenance costs when you’re looking for your next home.
And before you buy, invest in a property survey to identify any problems.
This will help you answer questions like:
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How old is the boiler? They typically have a lifespan of 10-15 years.
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Is there any mould that’ll need fixing? Sorting out leaky roofs, rising damp or poor ventilation can be costly.
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What condition are the roof and chimneys in?
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Are there any signs of Japanese Knotweed? This invasive plant has underground roots that will damage anything in its path.
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Are there any signs of rot? You’ll need to confirm the extent of the problem and see if it’s treatable - if not, the timber may need replacing.
Looking for less maintenance? A new-build home could be the way to go
There are plenty of options when it comes to era and style of home, with many high quality homes on the market which require less investment in upkeep.
New-build homes are designed to take away the hassle and cost of upkeep compared to older properties.
New builds are constructed to the latest building standards and regulations and, with only your own wear-and-tear to deal with, you’re unlikely to need to fork out for repairs for a good few years.
What’s more, most new-build homes come with warranties to protect you in the case of any issues. Defects are usually covered for 2 years while the structural warranty lasts 10 years.
And if you’re worried about losing that homey feel of a period property, rest assured that there are plenty of design options to make sure your new build is totally your style.
You can often choose exactly how it looks, from the flooring, to the kitchen cabinets, to the garden design.
Whether you go for a new-build, or a place that has been on the block a little while longer, the most important thing is that you choose a home that works for you and your budget.
Key takeaways
- New research finds that owners of period homes built pre-1919 spend an average of £700 per month on upkeep
- The biggest costs go on fixing external elements like roofing, brickwork and walls
- Be sure to get a full survey done before you buy a period home to identify any issues and help anticipate future costs
New-build homeowners save £1,685 a year on energy bills
New data reveals the huge energy savings found with new-build homes, cutting bills by 57% or £1,685 a year on average.
Research from the Home Builders Federation released in May 2024 has shown the significant savings offered by new-build homes compared to older properties.
The average new-build energy bill is 57% cheaper than for older properties, equating to savings of £1,685 a year for those who live in a new-build home.
Type of new-build home |
Energy efficiency of new build versus similar older property |
Average monthly saving of a new build |
Average annual saving of a new build |
House |
+66% |
£183 |
£2,195 |
Flat |
+45% |
£71 |
£850 |
Maisonette |
+56% |
£120 |
£1,440 |
Bungalow |
+62% |
£124 |
£1,480 |
Homes built to new sustainability regulations from June 2023 onwards are proving to be the most energy efficient options on the market.
The research found that these newest builds save homeowners more than £2,000 on annual energy bills, which rises to £2,575 for houses specifically.
85% of new-build homes achieve an A or B EPC rating
85% of new-build homes achieve an A or B Energy Performance Certificate (EPC) rating compared to less than 5% of older properties.
An EPC rating is an assessment of how much energy your home uses per square metre and how much carbon dioxide it produces.
It takes into account things like the roof, walls, insulation, windows, heating system, lighting and renewable energy solutions. A is the top mark, showing a home has best-in-class energy efficiency.
What makes new-build homes more energy efficient?
New-build homes have energy efficiency built in from the very start of their construction. Everything from the materials to the building techniques are designed to keep heat in and use less energy.
Cavity wall insulation means the gaps between the inner and outer walls of a new-build home are filled with things like mineral wool, polystyrene beads or polyurethane foam. This helps store heat by bouncing it back into the home, rather than letting it escape through draughts.
High-efficiency heating systems also use less energy to generate more heat, while double or triple glazing, low energy lighting and dual flushes all use less energy than conventional equivalents.
New builds also come with brand new A+ appliances, which dramatically reduce the amount of energy used by your dishwasher, washing machine and other white goods.
Key takeaways
- 85% of new-build homes achieve an A or B Energy Performance Certificate (EPC) rating compared to less than 5% of older properties.
- New-build homes are more energy efficient because these considerations are built in from the very start of their construction.
- New-build homes are fitted with cavity wall insulation, double or triple glazing, and brand new A+ appliances which all contribute to a more energy-efficient property.
Bank Rate holds at 5.25%, so when will rates drop?
The Bank Rate has remained unchanged for the sixth time in a row since it was raised from 5% to 5.25% in August 2023. Meanwhile, average mortgage rates on two- and five-year fixed rate deals have increased for the first time in six months.
The Bank of England has kept the Bank Rate at 5.25% for the sixth time in a row.
The Bank’s Monetary Policy Committee (MPC) has voted by a majority of 7-2 to keep the Bank Rate unchanged at 5.25%.
Two members wanted to cut the rate by 0.25%, to 5%. This marks a slight shift from the last vote in March, when only one member voted to reduce the Bank Rate.
The Bank Rate, sometimes known as the 'base rate’ or ‘interest rates’, affects the rates that lenders charge their borrowers. It has remained at a 16-year high of 5.25% since last August.
Why has the Bank Rate been held again?
The Bank has been using interest rates as a way of controlling inflation. It raised interest rates from 0.1% at the end of 2021 to 5.25% last August.
The good news is that the Consumer Prices Index (CPI), a key measure of inflation, has fallen from 11.1% in October 2022 to 3.2% today.
However, 12-month CPI inflation dropped less than expected in March, prompting some people to speculate that interest rate cuts could be pushed back. The Bank has an inflation target of 2%.
The latest decision on interest rates was widely expected. The Bank said that while progress in key economic data is 'encouraging', it needs more evidence that inflation will stay low before it cuts interest rates.
The Bank added that lower oil and gas prices mean that inflation is expected to fall to around 2% before 'increasing slightly' in the second half of the year, to around 2.5%. It’s hoped it will then edge down again.
What does this mean for borrowers?
Borrowers on variable or tracker mortgages will be relieved that their rate is unlikely to go up. Though they’ll be disappointed the Bank Rate wasn’t cut.
According to Moneyfactscompare.co.uk, the average standard variable rate (SVR) is at 8.18%, down from 8.19% last November. The rate has stayed at this level since the start of April.
Meanwhile, borrowers locked into fixed-rate mortgages will not be impacted - yet. But borrowers who come off fixed-rate deals and remortgage soon are likely to see their mortgage repayments jump, squeezing household budgets further.
Annual mortgage repayments for the average buyer are now a staggering 61% higher than they were three years ago, before mortgage rates started climbing.
It means that in pure monetary terms, they have soared from £7,100 to £11,400. Two thirds of that hike is fuelled by higher mortgage rates, while one third is due to higher house prices.
First-time buyers are finding it tricky to afford mortgage repayments in the first place. Because of recent interest rate rises, mortgage affordability is now the biggest challenge for first-time buyers, according to the Building Societies Association (BSA).
But Nick Leeming, chairman of Jackson-Stops, points out that interest rates of around 5% are not high by historical standards.
“It’s important to keep in mind that, while the past 18 months have been a time of economic headwinds, the exceedingly low rates that became the norm in the 2010s were the exception and not the rule,” Leeming explains.
“A pivot towards lower rates in June, even if only minor, would help to ease affordability constraints at the lower end of the housing market and help to ensure chains don’t break down once sales have been agreed.”
What is the forecast for interest rates?
The Bank is generally expected to cut interest rates this year (assuming there’s no surprises in store). But opinions on when exactly this could happen, and by how much, naturally vary.
Mark Harris, chief executive of mortgage broker SPF Private Clients, believes it’s time for rate setters to be bold and start reducing rates: “The Bank was always likely to hold rates this month, and we expect June’s meeting to have a similar outcome.
“That said, by that point there should have been two further lots of improving inflation data, reinforcing the argument for cutting rates by the end of the summer.”
Leeming adds: “While no change was widely assumed, the expectation is that June’s meeting will finally break the base rate deadlock and initiate a rate cut.”
Will mortgage rates go down in 2024?
The housing market has been relatively stable in recent months. The number of sales agreed are now 12% higher than this time last year.
This improving picture is echoed in the Bank of England’s recent mortgage approval figures.
The number of mortgages given the green light in March stood at 61,300, edging up from 60,500 the previous month. Monthly mortgage approvals are now close to the 65,000 level seen during the three years leading up to the pandemic, says Hina Bhudia, Partner, Knight Frank Finance.
But in a blow to borrowers, mortgage rates have climbed in recent weeks. Big names including Nationwide, NatWest and Santander have raised rates on fixed-rate mortgages.
According to Moneyfactscompare.co.uk, the average two-year and five-year fixed rate was 5.91% and 5.48% respectively on 1 May, compared with 5.8% and 5.39% at the start of April.
That said, two major lenders provided a glimmer of hope this week, cutting some rates. Harris says: “With Barclays and Lloyds already announcing reductions this week, hopefully it is only a matter of time before other lenders follow suit.”
Our Executive Director of Research, Richard Donnell, believes that even if inflation and interest rates edge down, mortgage rates are unlikely to drop much further this year.
Donnell explains: “Lower interest rates would likely result in further modest declines in mortgage rates but how far depends on how low money markets see base rates falling.
“Economists currently expect base rates to fall to 3.5% by the end of 2025, which would imply mortgage rates remaining in and around the 4%+ range.”
Despite an improved outlook overall, Lucian Cook, head of residential research at Savills, also thinks it’s unlikely there’ll be a further “meaningful” fall in mortgage rates this year.
He adds: “However the highly competitive nature of the mortgage market has meant that mortgage costs have already nudged down this year, and have been much less volatile. Combined with an improved outlook for economic growth, and increased buyer confidence, we can now expect modest house price growth this year.”
Key takeaways
- The Bank of England has voted by a majority of 7-2 to keep the Bank Rate at 5.25%
- It’s the sixth time in a row that the rate has remained unchanged
- The Bank says that while progress in key economic data is “encouraging”, it needs to see more evidence that inflation will stay low before it cuts the Bank Rate.
Will mortgage rates go down in 2024?
Mortgage rates are not expected to fall further this year, but rising wages are likely to improve affordability for buyers as house prices stay flat.
In June last year, the average five-year fixed-rate loan for a 75% loan-to-value mortgage peaked at 5.8%, adding hundreds of pounds to monthly mortgage repayments for buyers and homeowners.
Today, that same mortgage has now fallen to an average rate of 4.4%.
Here’s how that difference pans out in terms of monthly mortgage payments.
Monthly repayments on a five-year fixed-rate 75% LTV over 25 years
Mortgage value |
£200,000 property value, 25% deposit |
£300,000 property value, 25% deposit |
£400,000 property value, 25% deposit |
£500,000 property value, 25% deposit |
5.8% monthly repayments |
£1,106 |
£1,422 |
£1,896 |
£2,370 |
4.4% monthly repayments |
£962 |
£1,237 |
£1,650 |
£2,063 |
Mortgage rates unlikely to drop below 4% in 2024
However, buyers holding out for lower mortgage rates in 2024 may be disappointed, as they are unlikely to decline much further this year, even if inflation and the Base Rate edge lower.
Our Executive Director of Research, Richard Donnell, says: ‘Expectations of lower interest rates are already priced into fixed rate mortgages today.
‘Lower interest rates would likely result in further modest declines in mortgage rates but how far depends on how low money markets see base rates falling.
‘Economists currently expect base rates to fall to 3.5% by the end of 2025, which would imply mortgage rates remaining in and around the 4%+ range.’
Why are mortgage rates going down?
Mortgage rates began to go down in the latter half of 2023, as inflation dropped from 6.3% in September to 4.2% in December. In February this year, inflation dropped to 3.8% and is expected to meet its 2% target in the coming months.
However, the Bank of England has held the base rate at 5.25% since August 2023, as inflation has stayed higher for longer than expected. It is expected to cut the base rate when it meets in June this year - and by the end of 2025, it's expected to lower it to 3%.
The bank rate determines the interest rate the Bank of England pays to commercial banks that hold money with them. It influences the rates those banks charge people to borrow money or pay on their savings.
What factors affect interest rates?
Inflation is the main reason interest rates are high in the UK at the moment. An unexpected rise in demand - or decrease in supply - can cause inflation to rise.
At the end of 2021, the Bank of England began to raise the base rate in order to reduce inflation and help slow down price rises for everyday items including food, petrol, gas and electricity.
It is working - and inflation has fallen a lot, but the Bank of England needs to keep the base rate high enough to ensure inflation comes back to its 2% target.
Global shocks can also have an impact on inflation, such as wars, pandemics or the blockage of major transport routes like the Suez Canal, as they affect the flow of goods around the globe.
How buyer affordability could improve in 2024
All that said, there are other ways in which buyer affordability is likely to improve this year: and that’s wages rising while house prices hold steady.
This trend is happening already, and it’s improving confidence among buyers.
‘Rising household disposable incomes are expected to be the primary driver of improved housing affordability over 2024,’ says Donnell.
‘Disposable incomes are projected to increase by 3.5% over 2024, while house prices look set to remain broadly flat over the year.’
In fact, momentum in the housing market is already ticking up and the number of sales agreed has climbed 9% year-on-year.
This, in turn, is encouraging more sellers to come to market, improving the choice available for buyers.
More choice for buyers in 2024
Currently there are 20% more homes for sale than there were in spring 2023, with the average estate agent having around 30 homes on their books.
And more choice for buyers means more opportunity for wriggle room when it comes to paying the asking price.
‘Our view is that a greater availability of homes for sale will keep price rises in check,’ says Donnell.
‘In Q1 2024, the average estate agent had almost 30 homes for sale, a return to the pre-pandemic average.
‘This means buyers have more choice and room to negotiate, especially where homes are failing to attract buyer interest in a timely manner.’
Affordable areas remain popular with buyers
While momentum is up among buyers and sellers across the UK, in more challenging mortgage rate times, it’s the affordable areas that are proving to be the biggest draw for buyers.
‘Sales activity is up across the board, with the strongest growth in sales taking place in areas with more affordable house prices, such as Yorkshire and the Humber (11%) and the North West (13%),’ says Donnell.
Meanwhile, the strongest growth in new sellers listing homes can be seen in the South West (28%) and North East (26%).
Over in the capital, the supply of homes for sale is just 8% higher, which means house prices are rebounding faster here than other parts of the UK, as more buyers compete for properties.
Asking price discounts narrow as house prices hold steady
While it remains a buyers’ market right now, buyers should know that the discounts being offered by sellers are starting to get smaller.
Towards the end of 2023, nearly half of sellers were offering discounts of 5% or more. That figure has now shrunk to two-fifths.
Similarly, the average discount offered at the end of last year was 4.5%, (£14,250). Today, it’s 3.9% (£10,000).
There continues to be a north/south divide in house prices, with homes in the south continuing to register house price falls as homes in the north see house price growth.
But all areas are recording higher annual price inflation than six months ago, as sales volumes recover and pricing levels firm.
So while there’s still room to negotiate, house prices are starting to hold steady in 2024 and we don’t expect to see a further fall in property prices this year.
Key takeaways
- Mortgage rates expected to stay in and around 4+% for the rest of 2024
- House prices will hold steady as rising wages improve affordability
- 20% more homes available for buyers in spring 2024
- Average agent now has 30 homes on their books
Housing affordability more of a challenge in southern England
The challenges facing first time buyers and uspizers right now all boil down to one thing: affordability. And buyers in the south of England are suffering the most on this front. Our Executive Director of Research, Richard Donnell, takes a look at what’s happening in the housing market.
The divide in market activity between the south of England and the rest of the UK is becoming starker on the back of higher mortgage rates.
Why are homes in the south more expensive?
After the global financial crisis in 2007, house prices in southern England rebounded, largely led by London. By 2014, house prices in London were rising at a rate of 20% year-on-year.
In 2015, mortgage regulations were introduced to prevent households taking on unsustainable levels of debt, which can lead to a boom/bust cycle for house prices.
However, those regulations came a little too late for southern England, where prices had already jumped ahead.
Since 2016, we have seen house price inflation under-perform, especially in London, and one key reason for that is the impact of those mortgage regulations.
They’ve meant that buyers have needed to inject more equity into the home they want to buy, in order to make their mortgage repayments more affordable.
The impact of stress testing mortgages and limiting high loan-to-income lending has since led to a decrease in buying power, which in turn has created a cap on demand.
Incomes needed by first-time buyers across the UK
The chart below shows the gross household income needed to rent and buy a typical first-time buyer priced home.
If a buyer is taking out an 80% loan-to-value mortgage (using a 20% deposit) at a rate of 4.5%, the income needed to repay it is broadly the same across most of the UK.
However, because house prices are higher in southern England, for the same type of property, buyers will need to be earning considerably more: well over £100,000.
When that purchase is then stress tested to an 8.5% mortgage rate, the income needed to secure the property jumps even higher, thereby ultimately reducing the number of people who can afford to buy it.
Data from the Office for National Statistics reveals that first-time buyer incomes are generally lower than the income needed for mortgage lenders’ stress-testing rates.
So, first-time buyers are getting around this problem by putting down larger deposits.
This enables them to get their loan-to-value percentage for their mortgage down, so that they can then afford to buy their home at the current stress-testing rates - and their monthly mortgage repayments then become more affordable.
Average first-time buyer deposit in London hits £145,000
In London, this approach means the average first-time buyer needs to have a £145,000 deposit and an annual income of £90,000.
It’s a similar but less extreme position across the rest of the south of England.
However for the rest of the UK, where house prices are lower, the average deposits needed to secure a home and the mortgage repayments for it look more manageable for more would-be buyers.
Calls for higher LTV loans to be made available, alongside the loosening of mortgage regulations, would help FTBs, but they would simply add to buying power, rather than delay the needed reset in affordability.
High LTV lending is very hard to achieve across southern England and consequently 95%+ lending here is a niche lending segment.
What industry solutions might help first-time buyers?
Long-term fixed rate mortgages are an option but this is a market that needs Government support to get off the ground.
Long term mortgages could potentially avoid the need to run a stress test on the borrower at a higher mortgage rate but the ‘loan to income flow’ limit would limit the size of the market: currently lenders are only able to lend 15% of their customers loans of over 4.5x their current income.
It is likely that we will see lenders look to review how they stress test new borrowers, such as applying lower stress rates for 5+ year fixed rate loans.
This flexing of affordability at the margins will help some borrowers. But it wont deliver the reset we need to open up the market to more buyers who don’t currently have access to the levels of equity needed.
With mortgage rates unlikely to get much lower in the short term, incomes growth is going to have to do the hard work in resetting affordability across southern England.
First time buyers adapting to market conditions
Our data shows first-time buyers in southern England are adapting, looking at areas with better value for money for the type of home they need as well as considering smaller homes at lower price points.
We have seen a shift to flats, which have attracted less demand in recent years, as first-time buyers targeted 3 bed homes at lower prices where there was the potential to improve the home.
The average value of a flat in London is just 3% higher than at the start of 2016. This compares to a 13% average increase for flats nationally and 39% for a house in the UK. This underperformance has made flats more affordable relative to incomes and explains the increase in demand.
Buyers should know though, that flats are often sold under the leasehold, which can mean additional running costs such as service charges and ground rents.
Key takeaways
- In 2014, London house prices were rising at a rate of 20% year-on-year
- In 2015, mortgage regulations began to include stress tests, often at rates 3% higher than the mortgage deal being offered
- This has reduced buying power in the south, where homes are more expensive
- In 2024, the average first-time buyer in London needs to have a £145,000 deposit and an annual income of £90,000