In our first PESTLE update shared publically, we summarise what key factors could influence the property sector in the coming months. Not surprisingly, the General Election is top of the agenda!
Political
With the run up to the next General Election in full swing, polices relating to households are starting to filter out. House building on a large scale seems to be a key agenda for the two major parties.
Labour has commissioned an independent review of housing called the Lyons Housing Review which calls for 200,000 new homes to be built each year. On the same basis, the Conservative Party have promised 200,000 starter homes for people under the age of 40 which would be designed to stop landlords ‘snapping up’ new properties.
There is a divide between the Labour and Conservative Parties as to whether rent controls should be introduced.
Economic
A recent HSBC report revealed that between January and November 2014, the value of buy-to-let mortgages on new purchases increased by 34% to £11.6 billion, which represents a rise of £3 billion over the corresponding period in 2013. On-going reports suggest that this lending trend is not going to slow, particularly among buy-to-let investors.
Recently published figures from the Nationwide Building Society suggest that UK house prices rose 7.2% during 2014. This is based on Nationwide’s own lending data. Breaking their data down into regions, we can see that London house prices rose by 17.8% while the North West region saw house prices rise by 3.8%.
Analysts are suggesting slower growth on house prices in 2015 than was the case in 2014, with many suggesting a rise of around 4%. One explanation for the cooling of the property market is that its recent peak in late 2013 and early 2014 was temporarily stimulated by government initiatives such as the Funding for Lending Scheme (FLS) and Help to Buy.
Under the new system of Stamp Duty, only those buying houses costing above £937,000 will pay more than previously. The HM Revenue and Customs have a Stamp Duty Calculator which, despite being basic, does show you how much Stamp Duty you are likely to pay on a property.
Social
According to the latest Lloyds Bank Homemovers Review, 2014 saw an 8% rise in the number of homeowners moving. This is the highest annual total since 2007 but still little more than half the average between 2004 and 2007.
Southampton took the top spot for the highest yields for ‘vanilla’ buy-to-let investors, followed by Manchester (7.98%) and Nottingham (7.67%). No London borough made it into the top 10.
A report by Savills forecasted that that the number of households in the private rented sector will increase by 1.2 million over the next five years. This is likely to increase demand for family housing in the sector as much as for smaller properties.
Countrywide Estate Agents predicts that the number of people renting will also increase by 600,000 over the next four years, and not just because of mortgage affordability, but also a lifestyle choice.
Technological
Property website onthemarket.com was launched in January 2015 by estate agents hoping it will break the market currently dominated by Rightmove and Zoopla and cost them less to list on. Check out this interesting review by The Guardian.
Legal
A trial was launched in the West Midlands in December 2014 which requires landlords to check the immigration status of their tenants or be faced with a fine of up to £3,000. Depending on the outcome of the General Election, this could be rolled out nationwide later this year.
More and more Local Authorities are starting to adopt selective licensing schemes for landlords and Liverpool has just launched the largest compulsory scheme of its kind in the country. Some Government officials are critical of such schemes and expressed a preference for voluntary accreditation among landlords. Could the General Election have any kind of impact?
Environmental
Under the Green Deal Home Improvement Fund, people may be able to claim back money from the Government if they make energy-saving home improvements. From the end of last year, a further £30 million in vouchers was made available in Phase 2 of the fund. Further releases will be announced on a quarterly basis with the next release expected soon. More information on how to apply for the Green Deal is availablehere.
From April 6th, landlords will no longer be able to claim income tax relief using the Landlords Energy Saving Allowance. As of April 2018, all rental properties must have an energy rating of Band E or higher, otherwise they will be unlawful to let.
