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

by Blackstones

Average rent in London: April 2024

The average rent in London is now £2,121 per month after +4.2% growth in the last year. The cheapest average rent is in Bexley (£1,520) and the highest average rent is in Kensington and Chelsea (£3,459), although rental increases are slowing in the most expensive parts of the city.

London is by far the most expensive place to rent a home in the UK with an average rent of £2,121 for new lets. Average rents in London are almost double the UK average of £1,220.

However, rental inflation in London has slowed in the last 12 months, now at +4.2% versus +14.8% a year ago. This is lower than UK-wide growth of +7.2% over the last year.

Average rental prices in London

Average rent by borough in London

The table sets out the average rent for every local authority in London, starting with the cheapest. It also shows how much rents for new lets have increased in the last 12 months in each location.

Rental growth has slowed the most in Inner London boroughs, which are also commonly the most expensive with average rents sitting well above £2,000 per month. For example, the average rent in Kensington and Chelsea and the City of Westminster exceed £3,000 but growth has stalled to +3.10% and +1.30% respectively.

This slowdown is a response to affordability challenges and lower demand for new lets in the centre of the capital. It suggests landlords are becoming more realistic in pricing their rentals and may be taking cost-of-living struggles into consideration when setting new rates, which tend to be exacerbated for those in the rental market.

However, the experience of renters in Outer London is a different story, with ongoing double-digit rental inflation in several areas. The rises stretch to +12.9% in Havering, where the average annual rental bill is now £2,160 more expensive than a year ago.

Rents have also risen by more than +11% in the last year in more affordable boroughs of Sutton, Redbridge, Barking and Dagenham, and Waltham Forest.

The chart shows how rents have risen in London boroughs over the last year, highlighting the difference between inner and outer boroughs.

What’s next for the London rental market in 2024?

We expect the growth of London rents to slow to around +2% on average in 2024.

It’ll be a reprieve for London renters as they already face the highest rents and lowest affordability of anywhere in the country. The average renting household in London (1.25 people) already spends 40.4% of their earnings on rent compared to a UK average of 28.4%.

Average rent in the UK: February 2024

Demand from London renters will continue to drop as many cannot afford further rent rises amidst other affordability pressures.

London renters will continue to look for lower rental prices in the outer boroughs and nearby commuter towns, which will keep average rents rising more quickly in these places.

Key takeaways

• London’s average rent is currently £2,121 after +4.2% growth in the last year
• Growth has slowed from +6.4% last month and +14.8% a year ago
• The current annual increase is lower than the UK as a whole as London rents have started to reach an affordability ceiling
• The borough of Bexley has the cheapest average rent in London at £1,520 but rents are rising quickly in these comparatively cheap spots on the outskirts
• Rents are much higher in Inner London boroughs like Kensington and Chelsea, the City of Westminster and Camden - but rents are rising more slowly at between +1% and +4%

by Blackstones

Sales on the up as house prices hold steady

Buyer confidence is improving and 12% more homes are going under offer compared to this time last year. Mortgage approvals for home purchases are also up 32%.

The housing market is now more balanced than it was before the pandemic, which is good news for sellers, as it means more people have a chance of moving home in 2024.

The number of homes available for sale is continuing to grow but house price inflation remains broadly static.

And static house prices are good for buyers, who are already struggling to cope with a 60% increase in mortgage payments in 2024.

Meanwhile, more homes for sale and renewed buyer confidence means more sales are being agreed: in fact sales agreed are up 12% compared to this time last year.

And for the first four months of 2024, the number of homes going under offer has also been higher than in the first 4 months of 2023.

Our Executive Director of Research, Richard Donnell, says: ‘The housing sales pipeline is now rebuilding after a period of lower sales, when mortgage rates spiked higher in 2022 and 2023.

‘Our data shows that the housing market remains on track for 1.1m sales completions in 2024, up 10% on 2023.’

Mortgage approvals up more than 30%

Mortgage approvals for home purchases went up 32% year-on-year in February 2024, marking another return towards pre-pandemic levels.

‘The 4 to 6+ month time lag between agreeing a sale ‘subject to contract’ and moving in, means sales completion data is yet to register an upturn but this will emerge in the coming months,’ says Donnell.

House prices firming as market activity improves

House prices are continuing to hold steady right now, and annual house price inflation is largely unchanged since last month. It currently stands at -0.2% at the end of March 2024.

‘House prices continue to fall, at a slowing rate, across five English regions covering southern England and the East Midlands, with prices down the most in the East of England (-1.7%),’ says Donnell.

‘However, in the north of England, West Midlands, Wales, Scotland and Northern Ireland, house price inflation has moved into positive territory, with prices in Belfast rising by 4.5%.’

Higher mortgage rates continue to affect buyer affordability

In southern England, where homes are more expensive, buyers are being hit harder by higher mortgage rates, low income growth and rising living costs.

This, in turn, is affecting house prices, as sellers set lower asking prices in order to attract a sale. Our data shows that 95-100% of homes in southern England are in markets where prices are currently falling.

However, at a national level, only 64% of homes are in markets registering annual price falls. Back in October last year, that number was much higher: 82%.

‘The scale of these price falls is relatively modest, in most cases between 0% and -3%,’ says Donnell.

‘We expect house prices to continue to firm over 2024 but we don’t expect house price inflation to start accelerating. The current trends in price inflation, and the divergence between the south and the rest of the UK, are expected to continue over the coming months.

‘Much depends on the outlook for interest rates and how this influences mortgage rates. Fixed rate mortgages today already reflect expectations for interest rate reductions in the future and we don’t expect any major changes in average mortgage rates over the rest of the year.

‘What the housing market needs most is continued price stability, which will create the right environment for continued growth in sales.’

Key takeaways

• Sales agreed volumes up 12% year-on-year as house prices stay static
• Homes in the south are currently seeing negative price inflation in the UK
• 64% of homes are in markets with price falls, but this is down from 82% last October

by Blackstones

Mortgage repayments up 60% since 2021

Home buyers are currently facing an annual increase of £4,300 on their mortgage repayments, rising to £7,500 in London.

How much have mortgages risen since 2021?

Across the whole of the UK, the average buyer is having to find an extra £4,320-a-year to pay their mortgage in 2024, when buying an average priced home with a 30% deposit.

Back in 2021, the average annual mortgage payment was £7,000. Today, it’s £11,400.

And higher mortgage rates are hitting southern England the hardest.

In London, the average buyer will need to find an extra £7,500-a-year to cover the cost of their mortgage, which is now amounting to £23,000-a-year. In 2021, that figure was closer to £15,000.

In the South East, annual repayments on mortgages have risen by £6,000, while in the South West, they’ve gone up by £5,300 a year.

Across the rest of the UK, the picture is less bleak, with buyers in the Midlands needing to find an extra £3,900, while buyers in the North East are paying an extra £2,350.

Our Executive Director of Research, Richard Donnell, says: ‘At a region and country level there has been a 50% to 70% increase in mortgage repayments for a typical buyer between 2021 and 2024.

‘The largest monetary impact is in southern England, where house prices are higher. The annual cost of mortgage repayments for an average priced home is more than £5,000 higher per annum in 2024 than 2021 across the South West, South East, East of England.

‘Two thirds of this increase is a result of higher mortgage rates. However, one third is also down to the fact that average house prices are still 13% higher than they were in March 2021.’

Annual mortgage payments across the UK: 2021 vs 2024

Key takeaways

• The annual mortgage repayments for the average buyer in 2024 have now reached £11,400
• In London, that figure rises to more than £23,000-a-year
• Buyers in the south east are paying £16,600-a-year, while in the east of England, annual repayments average out at £14,530

by Blackstones

The highest yielding areas for buy-to-let property in the UK

Considering becoming a landlord? One strategy for investment is to focus on higher yielding markets. Here are the top investor hotspots in the UK.

Ready to become a landlord and want the biggest return on your investment?

It’s worth getting to grips with rental yield if you’re purchasing a buy-to-let property.

Gross rental yield is the annual rental income expressed as a percentage of the property price. Net rental yield also factors in the cost of maintaining and renting out the rental property. Both can help you decide if a property is a good investment.

The average gross rental yield in the UK is currently 5.60%. This is based on the average buy-to-let property costing £261,897 and the UK’s average rent being £1,223, according to our latest data.

Gross yields have improved across all regions in the last year as house prices have started to fall or remained the same while rents have continued to rise.

Keep in mind that tenant demand and the potential for house price growth - among other factors - should also be considered with property investment.

Top cities for rental yields in the UK

Sunderland, Aberdeen and Burnley top the chart for the highest rental yields in the UK, with average gross yields over 8%.

The top 17 cities for rental yields in the UK are all in the North of England and Scotland. In contrast, southern cities tend to have much higher house prices, bringing the gross yield down for buy-to-let properties.

Here’s how every city in the UK compares for gross rental yield.

Key takeaways

• If you’re looking for a buy-to-let property, rental yield can help you decide if the cost of the property is worth the potential rental income
• Gross rental yields have increased in the last year as rents have risen at a faster rate than house prices
• The highest yielding cities in the UK are Sunderland, Aberdeen and Burnley, which offer average gross yields of 8%+
• The North East is the best region for investors looking for strong yields, offering an average of 7.65%
• We reveal the three highest yielding areas in every region of the UK
• Take other factors into account before you invest, like tenant demand and the potential for future house price growth

by Blackstones

The UK’s cheapest places to rent a home in 2024

Looking for a rental home that doesn’t cost an arm and a leg? Here’s your complete guide to the cheapest places to rent in the UK in 2024.

The UK’s average rent is now £1,223, a rise of +7.8% in the last year.

That’s the lowest level of rent rises for 2 years as the heat finally comes out of the rental market. Demand has dropped a fifth in a year and supply has risen by a fifth in the same period.

However, we still expect rents to rise in 2024, although a little more slowly. This is because rental demand is double the rate of before the pandemic, with 15 enquiries for every home to rent. At the same time, supply of rental homes remains 28% below the pre-pandemic average.

So with rents still rising and the cost-of-living squeeze pushing all our purses to the limit, you might be looking for a cheaper home to rent.

The good news is there are places where it’s much cheaper to rent a home than others. Let’s take a look at the regions, cities and local areas with the cheapest rents in the UK.

The cheapest places to rent in 2024: Regions

For the cheapest rents in the country, set your sights on the North East - you could expect to spend an average of £695 per month on rent here. It’s also the only region with no rental markets averaging more than £1,000 per month.

Northern Ireland, Scotland, Yorkshire and the Humber, and the North West all sit at the cheaper end of the scale too, with rents averaging less than £800 per month at the start of 2024.

As you may expect, rents across the South of England are much more expensive.

London’s average rent of £2,121 per month makes it almost twice as pricey as anywhere else. However, London renters will be glad to hear it has recorded the sharpest slowdown in rent rises, now at +5.1% compared to +15.3% a year ago.

The capital’s high rents are followed by the South East (£1,325), where nearly all private rental homes are now in areas with average rents higher than £1,000 per month. In 2020, that figure was less than 50%.

Then you’ve got the East of England (£1,163), where 70% of homes sit in £1,000-rent markets, and the South West (£1,077), with more than half now over that benchmark.

The cheapest places to rent in 2024: Cities

We’ve got rental data for every city in the UK, and you might be surprised when it comes to the cheapest (and most expensive) places.

The cost of rent varies a huge amount across UK cities, with the lowest in Burnley (£566), Grimsby (£608) and Hull (£612) and the highest in Brighton (£1,616), Oxford (£1,667) and London (£2,047).

Some of the UK’s most popular cities for students and young professionals are cheaper than you might think, too. Liverpool’s average rent comes in at £801 per month, closely followed by Sheffield (£809), Newcastle (£833), Swansea (£867) and Plymouth (£878).

When it comes to Scotland, you’ll find cheap city rents in Glasgow, where rents average £951 per month. Edinburgh is much pricier with an average rent of £1,263 per month.

The cheapest places to rent in 2024: Local authority areas

Let’s go one step further and dive into the local authority areas with the cheapest rent in the UK.

At the top of the table we’ve got Hartlepool, with an average rent of £527 in 2024, along with East Ayrshire (£548), Burnley (£556) and Dumfries and Galloway (£557).

The North East dominates the list, with Country Durham (£575), Redcar and Cleveland (£588), North East Lincolnshire (£608) and Darlington (£611) all featuring.

The North West is also well-represented when it comes to cheap rental spots - including Pendle (£583), Allerdale (£591), Hyndburn (£594), Copeland (£598) and Carlisle (£602).

The rest of the spots are filled by Scottish areas, with North Ayrshire (£602) and Angus (£604) recording some of the lowest average rents in 2024.

by Blackstones

Bank Rate holds at 5.25%, so when will rates drop?

The Bank Rate has remained unchanged for the fourth time in a row since it was raised from 5% to 5.25% in August 2023. Rate cuts aren’t expected until later in the year but mortgage costs have still been falling.

Why has the Bank Rate stayed the same?

The Bank of England monetary policy committee voted by a majority of 6-3 to keep the Bank Rate unchanged this month, with two members voting to increase it by 0.25% and one to cut it by 0.25%.

Although energy prices have fallen, wage growth has eased and the prices of goods and services have been rising more slowly, there’s still a risk that overall inflation will increase again.

The conflict in the Middle East and the attacks on container ships in the Red Sea are two of the factors that could see prices rising faster again.

The committee forecasts that inflation will temporarily fall to its target of 2% in the second quarter of 2024 but that it will increase again over the rest of the year.

It then thinks it will be 2.3% in two years’ time and 1.9% in three. Because of this, there are no rate cuts for now, despite little economic growth.

The Bank of England is giving nothing away about how long it thinks rates should stay the same but experts are predicting that there could be a cut in May or June.

What’s happening to mortgage rates?

While borrowers on variable rates will be disappointed that the cost of their mortgages won’t be going down this month, lenders have been cutting the rates of new mortgage deals over the last six months.

This is good news for first-time buyers but anyone remortgaging is still likely to experience a shock increase in their mortgage repayments.

Mortgage costs – whether you’re taking out a new deal or reverting to your lender’s standard variable rate – remain much higher than they were two or five years ago, when most borrowers would have taken out their current deals.

How have higher mortgage costs affected house prices?

Higher mortgage rates led to fewer property purchases and less mortgage lending in 2023, according to industry body UK Finance. Despite this drop in demand, house prices didn’t follow for the majority of UK homeowners.

According to our latest data, more than half (56%) of homeowners saw the value of their homes stay the same or increase by at least 1% in 2023.

A quarter of homes increased in value by between 1% and 5% while a 10th increased by a sizeable 5% or more.

The average value increase was £7,800. Percentage price rises were larger in more affordable areas of the country, with the biggest increases in the North West and Scotland.

This is dramatically different to 2022, though, when 96% of homes saw their value staying the same or going up and the average increase was £19,700 where it did rise.

What’s the outlook for the mortgage market?

While mortgage costs have been going down, mortgage rates will continue to be relatively high compared to two or more years ago. Rate cuts are on the horizon, though, which will be welcome news for first-time buyers and homeowners alike.

Our Executive Director of Research, Richard Donnell, says: 'The debate about the timing and scale of base rate cuts is important for the mortgage rate outlook.

'The peak in base rates last year led financial markets to bet on lower rates in 2024 and into 2025, which have shaved almost 1% off fixed rate mortgages over the last 2 months.

'There is a sense these cuts to rates are close to bottoming out for now and unlikely to move any lower.

'Inflation is down but not out and central banks want to get it under control before cutting base rates.

'It looks likely mortgage rates will remain in the 4.5% to 5% range, which is still cheap by long run standards.

'Those looking to move or refinance should chat to a broker and seek advice about the rates available and the best strategy for them.'

Key takeaways

• The Bank Rate remained at 5.25% today, despite hopes it would come down
• Inflation has fallen significantly over the past year but it's still above the Bank of England’s target of 2%. It stood at 4% in December 2023, unexpectedly rising slightly from November’s figure of 3.9%
• World events are among the factors that could push inflation up again in the second half of this year
• But experts are predicting that there could be a cut in May or June

by Blackstones

Rental Market Report: March 2024

The average UK rent is now £1,223 after a +7.8% 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 £1,223 as of January 2024 (published in March 2024).

Rents have risen +7.8% in the last year, the slowest rate of growth in two years.

Key figures

UK rental inflation lowest for 2 years

The heat is finally coming out of UK rent rises. Annual growth is now at the lowest rate for two years, down to +7.8% from +11% a year ago.

This is down to weakening demand and growing affordability pressures on renters, rather than a big boost in rental supply.

No major expansion in rental supply

New investment from private landlords remains low, with the average letting agent currently listing 12 homes for rent. This is a fifth higher than last year but 28% below the pre-pandemic average (16 homes).

Demand cools but still outweighs supply

Demand for rented homes has fallen by a fifth over the last year. One-off pandemic factors have receded, the labour market has cooled and settling mortgage rates have supported first-time buyers.

However, there are more than 15 enquiries for every home to rent. This is double the rate of before the pandemic, despite dropping from over 40 enquiries per property in 2021.

The supply and demand imbalance is narrowing but is far from closed. I expect rents to continue to rise in 2024, just at a slowing rate.

Rental inflation in line with a year ago across most of UK

Across most of the country, rental growth is broadly in line with a year ago despite weaker demand.

Rental inflation is starting to slow across all major cities, with London seeing the biggest slowdown.

Rents continue to rise the fastest in Scotland (+11.6%). In fact, it’s the only UK region or country with double-digit rental growth, although it’s seen a slight slowdown compared to a year ago.

Rental growth slows the most in London

London has recorded a sharp slowdown in annual rental inflation, with rents now rising at a rate of +5.1% compared to +15.3% a year ago.

The balance between supply and demand has narrowed the most in London, with demand -30% lower than a year ago while available supply has increased by the same amount.

This is down to London’s high rents combining with other cost-of-living pressures to hit the pockets of renters, making rising rents ever-less affordable.

Pandemic price growth pushes half of rented homes into £1,000+ per month markets

Rents are 29% higher than pre-pandemic on average

The pandemic years have driven a step-change in rental growth, with the average UK rent jumping 29% since January 2020.

This has pushed many more properties into higher price brackets. Over half of rented homes in the UK (51%) are now in markets with average rents of more than £1,000 per month. This is almost double the number of rental homes in these pricey markets compared to five years ago.

More high-rent areas across Southern England

Rents in southern England have been close to, or above, £1,000 per calendar month for some time. The fast pandemic-fuelled rental growth has pushed many more over this threshold.

Nearly all private rental homes in the South East are now in areas with average rents higher than £1,000 per month compared to less than half in 2020.

In the East of England, it’s 70% today compared to only 24% in 2020. Over half of rented homes in the South West have also breached the £1,000 per month mark.

Rise in £1,000+ rents in affordable regions

A fifth of rented homes in Scotland, the North West, East Midlands and West Midlands are now in areas with average rents above £1,000 per month.

Just 3 years ago, nowhere outside of the South of England had an average rent higher than £1,000.

The North East remains the only region with no £1,000+ rental markets, while 4% of areas in Yorkshire and the Humber are over this price threshold.

Build-to-rent creates new city centre rental markets

There are now more of these £1,000 per month markets in regional markets, as new city centre rental markets emerge at the same time.

The rise of corporate and institutional investment in rented homes has led to the delivery of more than 90,000 new built-to-rent homes across the UK in recent years - with more to come. House builders are also starting to sell new-build homes to corporate landlords.

Rents to remain ‘unaffordable’ in 2024

We measure ‘rental affordability’ by looking at average rent as a percentage of average gross earnings, adjusted to reflect the estimated total income of renting households.

At the end of 2023, this measure of rental affordability reached a high of 29.5%. It came after rents for new lets rose faster than average earnings for more than 2 years (since October 2021).

Rental affordability improved between 2016 and 2021 as rents rose by only 4% in that time. This was a result of weaker demand post-Brexit, growth in rental supply, and easier access to home ownership thanks to low mortgage rates.

In contrast, recent years have been marked by strong demand, no increase in supply and high mortgage rates making it harder for first-time buyers to access home ownership.

This widened the supply and demand imbalance and pushed rents for new lets up faster than earnings. Ultimately, this has led to the deterioration in rental affordability.

The graph shows how rental affordability has tracked since December 2009 to today, with our projection for the rest of this year.

It highlights the difficulties faced by renters in the current climate, even with rents no longer rising as quickly.

Rent predictions for 2024: Rental supply must grow to improve rental affordability

We project that UK rental inflation will halve to +5% in 2024. Meanwhile, the consensus among economic forecasters is that average earnings growth will also slow, to just below +4%.

This means no immediate prospect that rental affordability will improve in 2024.

There must be a sustained expansion in rental supply to see a faster slowdown in rental inflation. It would even result in rents falling in some city centres.

However, any boost in supply this year is unlikely to be at a scale that impacts overall rental growth.

Continually low levels of net-new investment in rental properties means supply will remain below average, supporting further rent rises.

The clear conclusion is that the best way to improve affordability is to boost rental supply. This will continue to come from the new-build sector, but the big needle-mover would be more investment by private landlords.

This looks unlikely - and further rationalisation of landlord portfolios in the face of higher mortgage rates, alongside growing regulation, will offset any rise in new investment in rental supply.

by Blackstones

Sellers make £74k average profit in 2023

9 in 10 homeowners who sold up in 2023 made 25% in profit, with the average seller of a £275,000 property earning £74,000. How much money did your home make?

House prices fell for the first time in 1 1 years during 2023. But that doesn’t mean it’s all doom and gloom for sellers.

We analysed a sample of over 100,000 Land Registry entries from the past 12 months to see how much profit sellers made last year - and the results might surprise.

The average gross gains from a home sale in 2023 was £74,000.

Meanwhile, 93% of sellers made a profit, despite house prices falling.

Sellers’ profits in different areas of the UK

Key takeaways

• The average seller in 2023 put their property on the market after 9 years. In that time, their homes earned them between £30,000 to £137,000, depending on where they lived
• In London, the average seller made £137,000, which works out at just over £15,000 for each year of ownership
• In the North East, the average seller made £30,000, which works out at just over £4,000 for each year of ownership
• Homeowners selling bungalows and detached homes made over £100,000 on average
• However, 1 in 14 sellers (or 7%) sold at a loss of £17,000 on average

by Blackstones

What does the Spring Budget 2024 mean for the housing market?

It was a disappointing Budget for anyone hoping for measures to help home buyers and mortgage borrowers but tax changes announced could have a small impact.

Today’s Spring Budget was a chance for the Government to boost its popularity ahead of this year’s general election but there will be many younger and less wealthy voters left disappointed by the lack of measures to address the shortage of affordable housing in the UK and the challenges of getting a mortgage.

It was thought that a new 99% mortgage scheme could be announced but this idea has now been ditched.

It would have helped aspiring first-time buyers with small deposits get onto the property ladder, although critics pointed out that it would also expose them to greater risk of getting into negative equity if house prices were to fall.

There were also hopes that the early withdrawal penalty on Lifetime ISAs, which help people save for their first home or retirement, would be reduced and the limit on the value of home you can buy using the money you save in them would be increased.

However, there were some tax tweaks that could result in a modest boost to the housing market.

Capital gains tax cut   

Currently, if you sell a residential property that isn’t your main home and you’re a higher rate tax payer, you pay 28% tax on the profits you make.

From April this will be cut to 24%, which could encourage more people to sell property and increase the supply of homes available.

On the other hand, wealthy property owners will get to keep more of the money they make when they sell it.

Holiday lettings tax breaks abolished

Owners of furnished holiday lets currently get more tax breaks than owners of buy-to-let properties but these will be scrapped from April, making holiday letting a less attractive option.

This could result in more longer-term rental property becoming available or more homes available to buy for local people.

Our Executive Director of Research, Richard Donnell, says: 'The furnished holiday let changes will see a mix of impacts split between more homes returning into the long let market or some of these homes being sold, benefitting from a reduction in capital gains tax.

'The impact will be felt in tourist hotspots, where most of these homes are to be found. But it's unlikely to have a big impact on the wider market in these areas. It is a further attempt to ensure investors can't outbid first time buyers.'

Stamp duty relief on multiple dwellings scrapped

There was one change to stamp duty announced, however.

From June, anyone buying more than one residential property at once will no longer pay less stamp duty than if they were buying them individually.

The Government says this is because there was no evidence that this relief was encouraging more people to invest in the private rented sector.

Our expert's view

'The Budget marks another missed opportunity to take action on boosting supply and mortgage availability in the housing market,' says Donnell.

'The consensus is that the country needs more new homes. Supply has increased but this has now stalled.

'There is a need for a widespread reform of the planning system to encourage more supply. More funding is needed for social and affordable homes, as well as investment in housing infrastructure to unlock more homes.

'The Government should also look to support the emergence of a long-term fixed rate mortgage market as a matter of urgency.

'This will help more young people with smaller deposits access home ownership – particularly in southern England, where deposit size is the biggest barrier to getting on the housing ladder.

'Another missed opportunity is the decision not to make the £625,000 threshold for first-time buyer relief permanent. This means 30% more first-time buyers will be liable to pay full stamp duty from March next year.'

Key takeaways

• The Chancellor has announced a cut in the rate of capital gains tax paid on property sales
• Tax breaks for those letting holiday homes are to be scrapped
• There are no plans to make the temporary higher stamp duty threshold permanent

by Blackstones