Foxtons estate agents are saying that the London house market is being affected by the number of landlords who are quitting and selling their properties.
- Landlords Selling Properties: A growing number of landlords in London are selling their properties. According to Foxtons’ chief executive, Guy Gittins, this trend is partly supporting the property market in London.
- Why Are Landlords Selling? a. Rising Mortgage Rates: Buy-to-let mortgage rates are on the rise, reaching an average of 6.94%. This increase has made some property investments unprofitable, especially for smaller landlords. b. Government Red Tape: Government policies and regulations have created obstacles for landlords. The introduction of extra stamp duty and the removal of interest tax relief have made entering the market more challenging.
- Effects on the Market:
- More Sales and Exchanges: There have been more properties sold and exchanged, but fewer new landlords entering the market.
- Rental Market in Danger: With fewer landlords entering the market, there’s a risk of an imbalance between supply and demand in the rental sector. This could create a crisis if the government doesn’t take action to encourage more landlords to invest.
- Rents are Increasing: The average rent has increased by around 12%, and more people are choosing to stay in their current homes to avoid the costs of moving.
- Foxtons’ Performance:
- Revenue Increase: Foxtons, the London-based estate agent, reported a 9% increase in revenue to £70 million in the first half of the year.
- Letting Income Up, Sales Down: Income from lettings jumped 14%, but sales were down 19%. Gittins anticipates that sales will continue to be slow.
Summary for Prospective Investors:
- Investment Opportunities: While some landlords are selling, others might see an opportunity to enter the market at a favorable price, particularly if they can navigate the governmental hurdles.
- Consider Rental Market Carefully: The rental market is both growing and potentially unstable. While rents are surging (a plus for landlords), the imbalance of supply and demand could lead to longer-term problems.
- Watch Government Policy: As regulations and policies have had a significant impact on the market, it’s essential to stay informed about potential changes. The government’s future actions could either hinder or help your investment strategy.
In essence, London’s property market is currently being shaped by a complex mix of mortgage rates, government policies, and market behaviors. While there are challenges, informed and strategic investors may find opportunities, particularly in the rental market