5 positive ways the property market may change
It will become cheaper to rent
Next year will see the Government ban fees charged to tenants, which represents an average saving of around £200, although this sum is thought to be much higher depending on the location of the property. As well as a ban on administration charges, deposit-free renting is set to go mainstream. This initiative, backed by the Government’s Rent Recognition Challenge, will allow tenants to pay an insurance premium of typically £100 instead of a cash deposit, which now costs an average of £1,041 (typically £1,750 in London)*.
Mortgages rates will remain low
The cost of lending to buy a property is expected to remain low for some time. Although another interest rate rise has been muted for some time, the Bank of England is largely adopting a ‘wait and see’ policy, with real-life not following its predictions. More importantly, some banks are still behind on their lending targets and are creating a ‘race to the bottom’ as a result. Low rates are being offered to entice borrowers as there is stiff competition to win business.
Proptech will make moving easier
Proptech – that’s technology specifically developed for the property industry – will have a huge impact on the way people buy, sell, rent and invest in property. From artificial intelligence to apps, it should become quicker and easier to find the perfect property and move in. As well as making life easier for the public –quicker searches, more relevant marketing and digital conveyancing – proptech will revolutionise what goes on in estate agency branches across the UK, improving efficiencies, bettering customer service and bringing the industry in line with other service sectors.
The leasehold system will become fairer
The Government has outlined changes to ground rents and leaseholds, designed to make the system fairer for tenants and landlords who may be subject to onerous ground rent rises and lease difficulties. Although there is no firm date for the introduction, it is expected there will be:-
- A ban on selling almost all brand new homes as leasehold, especially houses
- A guarantee that ground rents on new long leases – for both houses and flats – are set to zero
- A system that makes it cheaper and easier for existing leaseholders to buy out their freehold
- The prohibition of clauses that allow ground rents to increase heavily, without challenge, such as doubling every 10 years
- The provision of clear support to leaseholders – especially those who bought a brand new property - on the various routes to redress available to them
- Giving leaseholders equivalent rights to freeholders to challenge unfair service charges
Renting will go greener
The lettings market is counting down to April 2020, when it will become illegal to let any property with an EPC of F or G. The first phase of MEES (Minimum Energy Efficiency Standards) was rolled out in 2018, when all new-to-market and renewing tenancies had to possess an EPC certificate of E or above. Now there are less than two years before every let property must conform to set energy standards, which should result in cheaper utility bills for tenants.
*Tenancy Deposit Scheme