Well, the votes have been counted and, as predicted, Boris Johnson is the UK’s new Prime Minister. He has already announced a raft of new appointments to the Cabinet as well as plans to recruit 20,000 new police officers across the UK – so he has hit the ground running. But of course, what we are all waiting to hear about now is Brexit.
In terms of the London property market, despite recent Brexit uncertainty, recent months have seen demand subdued but steady. But now we have a new Prime Minister who has committed to leaving the EU by October 31st – with or without a deal – we believe we will start to emerge from this challenging period. And that has to be good news for investors and homeowners considering selling their property soon.
Last month, we looked at Boris’ track record in terms of house price growth and regeneration when he was Mayor of London and this may offer some grounds for optimism and perhaps signal a more positive outlook for the UK property market.
But we are not there yet. We expect sluggish demand to continue over the summer months as sellers wait to see what October 31st brings. So, if you do not need to sell your property now then it is advisable to bide your time and see how the market reacts over the next few months.
Of course, properties are still selling steadily at the moment. And the flip side is, if you are a first-time buyer, now might be a good time to consider making your first move onto the property ladder. Historically low mortgage interest rates and the Help to Buy scheme mean this couldn’t be a better time and if we leave the EU with a deal then the market could strengthen and house prices may start to rise, albeit gradually.
If you are an overseas investor, you will have seen the pound weaken yet further over the last few months, further cutting the cost of buying a UK property, while many developers continue to offer significant discounts to tempt buyers. So again this could be a good time for investors to move forward with investment plans that they have put on hold for a while.
For investor landlords who currently own and let out London property, this is probably not a good time to sell unless you need to release equity. The London rental market is extremely strong at the moment, demand for rental accommodation is high and properties are letting very quickly, often with less than a week’s void between tenancies. Landlords are therefore achieving good rental yields so there is little point in rushing to sell unless you have a good reason to do so. Instead wait and see how the housing market performs over the next few months.
A word of caution though if you are considering renting out a property for the first time, perhaps because you are unable to sell it for the price you need to achieve or simply because you are waiting for the market to pick up. It is vital to use a professional letting agent to ensure you do not inadvertently let to a rogue tenant. We have found that there has been a dramatic 117% rise this year (compared to 2018) in fraudulent lettings applications by fake tenants seeking to rent properties from us. This is due in part to the recent introduction of the Tenant Fees Act 2019 which means rogue tenants no longer need to pay if their application is denied. And it may not simply be a case of a tenant who ends up not being able to pay the rent – it may actually be far worse – such as an application from a criminal organisation who will illegally sub-let the property or even use it as a brothel or drug farm.
We have robust systems in place to detect fake or criminal applicants, but smaller agencies may not be as thorough.
And the consequences of getting it wrong are a nightmare. It can take nine months to evict a tenant, and involve lost rent, the cost of mortgage payments paid out of the landlord’s own pocket, substantial legal fees and refurbishment costs to repair the damaged property (particularly bathrooms and kitchens) – totaling an average of over £48,000 for the average London landlord.
So we cannot emphasise enough the importance of using a professional lettings agent who will thoroughly reference any potential tenants and ensure they are employed, solvent and, perhaps most importantly, are who they say they are. If you are planning to buy or sell a property soon, or are considering letting your London apartment, please call our sales office on 020 3280 6400 or contact one of our London lettings branches.
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