Plan Insurance Blog

Landlords Stick or Twist – Housing Market Robust

In the ever-evolving landscape of the housing market, landlords are facing crucial decisions which will be influenced by the outlook of the sector. As buyer confidence surges and home sales see a notable uptick, the dilemma of whether to hold onto property assets or explore new investment opportunities becomes paramount.

Navigating the Current Housing Market – A Landlord’s Dilemma

With a 12% increase in homes going under offer compared to last year, coupled with a 32% surge in mortgage approvals for home purchases, the housing market is demonstrating resilience and buoyancy. While house prices remain relatively static, the increased availability of homes for sale signals a balanced market, offering both sellers and buyers favourable conditions.

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Rising Trends and Regional Disparities

Richard Donnell, Executive Director of Research at Zoopla, emphasises the promising trajectory of the housing sales pipeline, forecasting a 10% rise in sales completions for 2024. As the market gains momentum, the decision-making process for landlords hinges on the delicate balance between seizing current opportunities and mitigating risks.

However, regional disparities in house price inflation highlight varying challenges across the country. While some regions witness positive growth, others experience declining prices, with affordability concerns exacerbating the situation in southern England. Zoopla’s data indicates that 95-100% of properties in southern England are in housing markets where prices are currently dropping. The scale of these price drops is fairly minor with the majority being below -3%, Donnell compares the almost blanket valuation drops in the southern to a national average of only 64%. He also highlights that last October that figure number was far higher at 82%.

Uncertainty and Regulatory Shifts

As landlords weigh their options, many eyes will be focused on the Bank of England as it makes its next interest rate decision on Thursday, May 9th. Landlords may be hoping in vain for reduction in mortgage prices after the UK generated some worse than expected economic results. Although last month we reported how Office for National Statistics’ (ONS) data revealed the highest annual increase in rental prices over the past year. Landlords are also acutely aware that the rubber band of affordability for tenants can only be stretched so far before snapping. The implications of The Leasehold and Freehold Reform Bill will also play an important role in shaping the regulatory framework and market dynamics in the private rental sector.

It remains an unsettled landscape for landlords. Those seeking to take opportunities and navigate the challenges to their property portfolios will dedicate the required time to research in facilitate informed decision making.

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