UK House Prices Show Third Consecutive Monthly Rise as Mortgage Rates Decline

In a positive turn for the housing market, UK house prices have increased for the third consecutive month in November, with homeowners experiencing a 0.2% month-on-month rise. This follows a 0.9% rise in October and a 0.1% rise in September, marking the first three-month continuous increase since the summer of the previous year.

Nationwide, the UK’s largest building society, reported that on an annual basis, house prices were down by 2% in November, marking the best performance in nine months and a notable improvement from the 3.3% year-on-year fall recorded in October. The average property price in November was £258,557, reflecting a £5,231 decrease compared to the same month last year.

This positive trend is attributed to the market’s response to the belief that mortgage rate costs have peaked. The Bank of England’s decision to hold the base interest rate at 5.25%, after 14 consecutive increases, has contributed to the anticipation of a drop in mortgage costs, potentially boosting housing market activity.

Robert Gardner, the Chief Economist at Nationwide, noted a significant shift in market expectations regarding the future path of the bank rate. The prevailing view is that rates have peaked and are expected to be lowered to around 3.5% in the coming years, providing much-needed support for housing market activity.

While the Bank of England kept the rate at 5.25% in November, it has contributed to pushing down some two- and five-year fixed mortgage rates to below 5%, down from peak levels of over 6%. However, Governor Andrew Bailey emphasized that there is no immediate prospect of an interest rate cut as the Bank continues its efforts to bring inflation back to its 2% target.

Mark Harris, Chief Executive of mortgage broker SPF, highlighted the positive direction of new mortgage rates, with several lenders making reductions. However, he cautioned that although interest rates appear to have peaked, expectations of a swift downward movement to previous rock-bottom levels might be unrealistic. Higher pricing than borrowers have been accustomed to could make buyers relying on mortgages more price-sensitive due to ongoing affordability concerns.

London renters may face a staggering £166 million increase in energy bills after the UK government abandoned plans for mandatory energy efficiency measures for private landlords.

The scrapped proposals, announced in 2021, aimed to ensure all new tenancies had an Energy Performance Certificate (EPC) rating of C or better by 2025, with existing tenancies complying by 2028.

City Hall analysis reveals that 494,000 London rental properties currently have an EPC rating of band D or lower. These properties cost an average of £337 more per year to heat compared to higher-rated homes. The Mayor, Sadiq Khan, expresses concern about the potential impact on low-income and vulnerable renters, urging the government to reinstate energy efficiency plans.

Landlords can boost a property’s EPC rating through various means, but the government’s cancellation of plans to raise minimum energy efficiency standards means landlords are no longer obligated to agree to insulation works. The consequences include tenants living in cold and draughty homes, with a disproportionate financial burden, particularly on the most vulnerable.

Green Alliance’s Shaun Spiers emphasizes the environmental and financial consequences of leaky homes, calling for government intervention to ensure privately rented homes remain safe and warm. Age UK London’s CEO, Abi Wood, underscores the increased health risks for older individuals living in cold and damp conditions, urging more measures to make homes warmer.

In summary, the backtrack on energy efficiency measures poses financial and health risks for London renters, with the Mayor and advocacy groups urging the government to reinstate plans for standards and support vulnerable tenants.

SMART BUILDINGS TRANSFORMING COMMERCIAL REAL ESTATE
In the realm of commercial real estate, the integration of smart building technologies is ushering in a transformative era.

Ar. Suraj Mittal, Founder & CEO of Future Concepts, delves into the far-reaching impact on efficiency, sustainability, and occupant experience.

Automation Systems and Data Analytics:
Smart buildings utilize automation systems for optimal efficiency, employing IoT and sensors for dynamic adjustments in climate control, security, and energy consumption. This positions commercial properties as technologically advanced assets.

Renewable Energy Features:
Smart buildings prioritize eco-friendly sources like solar panels and wind energy systems, reducing environmental impact and reliance on traditional grids. Advanced storage solutions optimize the use of renewable resources.

Smart Facades Revolution:
Smart facades dynamically respond to environmental conditions, optimizing natural light and reducing energy consumption. Beyond aesthetics, they contribute to operational efficiency, positioning commercial properties as environmentally responsible entities.

Remote Building Management:
Remote building management gains significance with the rise of remote work. This technology allows remote monitoring and regulation of building systems, enhancing operational continuity and responsiveness in the modern workplace.

Return on Investment Considerations:
Revitalizing spaces with smart building technologies requires a careful evaluation of upfront costs against long-term gains. Stakeholders must analyze operational efficiencies, energy savings, marketability, and tenant satisfaction. Smart buildings emerge as lucrative assets, shaping the future of commercial real estate.

The integration of smart building technologies is not just a strategic choice; it’s a defining factor in reshaping the landscape of commercial real estate, ushering in an era of efficiency, sustainability, and user-centric design.

In collaboration with FORE Partnership’s Managing Partner Basil Demeroutis .we have launched The sustainability health check. Email us at ask@londonproperty.co.uk.for more information if you are invested in commercial real estate.

Don’t Underestimate the Value of Trackers in Today’s Market
In the dynamic landscape of the real estate market, rate levels remain a dominant topic of discussion, especially in the buy-to-let sector, where numerous lenders have been trimming rates in recent weeks.

This downward trend, if sustained, promises positive implications not just for landlord borrowers seeking to refinance but also for those considering portfolio expansions.

Higher rates pose challenges, increasing the affordability bar, but as rates decrease, it eases the financial pressure. This creates opportunities for remortgaging or facilitates strategic property acquisitions. The current market conditions emphasize the importance of having diverse financing options.

Landlords seek flexibility, especially when anticipating further rate reductions. While predicting market movements involves some uncertainty, the stability in money markets has led to falling swap rates, enabling lenders to offer attractive product price cuts.

Traditionally, fixed-rates have been favored, providing a stable option for landlords. However, with expectations of continued rate declines, opting for a long-term fixed rate may seem costly. Landlords may prefer shorter-term products, especially if they anticipate taking advantage of falling fixed-rates.

Tracker mortgage products have gained popularity in recent weeks due to their flexibility. Fleet Mortgages has reduced the Tracker loading on standard and limited company products, making them more appealing. The Tracker rates are currently at BBR plus 1.25% (6.5%) and BBR plus 1.15% (6.4%) for Green Tracker, catering to properties at EPC level C and above.

While there is a slight cost to monthly mortgage payments, landlords value the flexibility that Tracker mortgages provide. The ability to move from a tracker to a fixed rate at a chosen time without incurring fees is a significant advantage, especially if the market conditions align with expectations.

Many lenders, including Fleet, offer product transfer options at the end of existing deals, providing confidence to landlords that they can secure mortgage finance at potentially lower levels in the future. The emphasis is on providing advisers and landlord clients with product options that offer the flexibility or stability needed in evolving market conditions. Whether fixing rates now or opting for a short-term Tracker, landlords have choices that align with their strategies and market expectations.

Investment Giants Launch £100m Joint Venture for Energy-Efficient Affordable Housing

In a significant move, global investment firms Man GPM and Patrizia have formed a joint venture (JV) with a commitment to invest £100 million in constructing highly energy-efficient affordable housing in England. The collaboration, announced by Man GPM, the private markets investment arm of Man Group, and Germany-based Patrizia, aims to address the shortage of good-quality housing for mid-market renters in areas of England facing housing affordability challenges.

The JV will focus on developing new single-family rental homes, although the specific tenures offered are yet to be disclosed. This initiative reflects the increasing trend of private investment in the UK affordable housing sector, driven by the perceived security of UK property assets.

Patrizia, with €59 billion in assets under management, sees this JV as part of its broader goal to house 10,000 people in affordable and social homes through its pan-European impact investment strategy. The JV has already committed to forward-funding the development of 70 new homes with long-term affordable rents in a larger scheme in Milton Keynes.

All homes developed under the JV will be required to have an Energy Performance Certificate of Band A, demonstrating a commitment to high energy efficiency. The firms also aim for a “zero operational carbon footprint” for the housing projects.

Funds for the JV will come from Patrizia Sustainable Communities and Man Group, with Man GPM serving as the operating partner through its community housing team. Man GPM, actively involved in the UK housing market since 2017, has set a target to deliver 3,500 homes by 2026, including partnerships with housing associations. The Man Group subsidiary, Habitare Homes, is also part of its portfolio, operating as a for-profit registered provider.

Shamez Alibhai, Managing Director and Head of Community Housing at Man GPM, expressed hope that this innovative venture would establish a benchmark for delivering environmentally and socially sustainable housing developments.

For opportunities to invest in the UK property markets email us at ask@londonproperty.co.uk , we currently have mandates for land, build to rent & commercial real estate .