Residential Property Review – March 2023

Spring Budget – ‘trailblazer’ deals announced

In the Spring Budget on 15 March, as part of the Levelling Up White Paper, Chancellor Jeremy Hunt announced ‘trailblazer’ deals giving new and deeper devolution powers to local leaders in the Greater Manchester and West Midlands Combined Authorities.

For the first time outside of London, local leaders will now be able to set the strategic direction over the Affordable Housing Programme (AHP) in their areas. These two combined authorities will receive powers in a two-staged approach, initially having partial powers which will ensure the current 2021-26 AHP, which is overseen by Homes England, can be delivered.

After 2026, for any new AHP funding, these combined authorities will gain more powers, including directing Homes England to identify and bring forward sites for housing and to partner with providers. Homes England will still play a role in administering the programme, unlike in London.

Cautious boost for buyer enquiries

A more stable picture is emerging for the rest of 2023, according to the latest UK Residential Survey from the Royal Institute of Chartered Surveyors (RICS), despite a generally downbeat overall trend last month.

The headline reading for new buyer enquiries rebounded to a net balance of -29% (on a seasonally adjusted basis), a significant leap from -45% in January. Although this is a tenth consecutive negative monthly reading, it is also the least negative result since July 2022.

The new sales indicator was also less negative in February (-26%) than it had been a month earlier (-36%). In contrast, the average time taken to complete sales rose again to almost 19 weeks.

Commenting on the latest survey, Tarrant Parsons, Senior Economist at RICS, said, “The housing market continues to adjust to the tighter lending climate, with stretched mortgage affordability still weighing heavily on activity. Going forward… the latest survey feedback shows tentative signs that the ongoing decline in buyer enquiries is now moderating.”

Soaring rents push people out of London

The flight of workers from London will cause businesses to suffer, industry bodies have warned, as soaring rents continue to drive people out of the capital.

Strong rental demand has pushed London rents 20% higher in the last year, according to Foxtons, with the lack of options in the capital now forcing renters to move further out of the city in order to find a suitable place to live. In the same period, average house prices have fallen by 0.9%, according to Halifax, highlighting the difficulties renters have faced.

In trying economic conditions, more than half of landlords still plan to raise rents further to absorb extra costs. Some 63% of renters expressed concern or strong concern about how rising interest rates could affect their monthly rental payments in a recent survey by Finbri.

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