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1st July 2019
March 29th came and went, and months of uncertainty led to nothing - we didn’t leave the EU. But how has this affected the property market? We’re looking at the latest market trends and sharing our predictions for the summer.
The market is tired of waiting
Brexit might be delayed, but the property market has moved on regardless. According to the latest Nationwide House Price Index, property prices dropped by 0.2% in May. Essentially, now is a good time to buy. In fact, there has been a 10% reduction in prices over the past 18 months, however prices are predicted to increase nationally.
Source: https://www.reallymoving.com/news/by-date/june-2019
There’s more good news for buyers
Transaction rates are currently so low that lenders are now looking for new ways to encourage borrowing - one way is a change in how they are classifying expenditure. For example, instead of ranking a gym membership or music subscription as an essential item, these can now be seen as luxuries. Consequently, they can be removed from your outgoings; meaning you’re seen as being able to afford to pay more per month in mortgage repayments. And with this new approach, lending terms are now becoming much more favourable. However, things have been slower for homeowners looking to sell. Uncertainty over which Prime Minister candidate would be best for the property market might have played a part.
Speaking of which, one parliamentary decision has completely transformed the lettings market.
Lettings
On the 1st June, The Tenant Fee ban came into effect which means Tenants will only need to pay their rent and a deposit (of up to 5 weeks rent) to secure a property. Landlords will have to pay any agency fees.
This is great news for anybody looking to rent a property. Especially considering that the average deposit in England and Wales in 2018 was £1,110. However, we have started to see an increase in rent as a result of this.
Source: https://www.rightmove.co.uk/news/rental-price-tracker/
Landlords are also becoming less willing to take tenants with pets, given the cap on deposit amounts and therefore unable to compensate for potential damages.
But there are alternatives.
Zero deposit schemes can help tenants avoid other, sizable upfront letting costs. Instead of a deposit, they pay one week’s rent before moving in. This may sound enticing, but there are a few things to be aware of:
The one week fee is non-refundable.
Without a deposit, the insurance company can pursue tenants directly over damages and cleaning once they leave.
Some insurance companies will promise the landlord that they can get up to 12 weeks of rent back for the landlord.
This is still, undoubtedly, a huge step forward for tenants. However, it’s important to be mindful of the risks before deciding which avenue to take.
