UK Housing 2023: The Good, the Bad, and the Rental Reform Bill
Let’s take a look at the highs and lows in the housing industry this year.
It has been a wild year for the UK housing industry – an epic rollercoaster that saw landlords struggling with mortgage increases and tenants grappling with huge competition for homes.
What have been your highs and lows this year? Let us know in the comments below.
Mortgage Update
Mortgages have been hitting the headlines with alarming regularity in 2023. In December 2022, the base rate went up to 3.5% and we’re ending 2023 on 5.25% – which is actually good news, as the base rate has held at 5.25% since August 2023 after FOURTEEN consecutive increases.
But the knock on effect on mortgages has been dreary. Despite the fact the rate is currently holding steady, this is the highest it’s been in 15 years and we’re unlikely to see the fantastic lows of bygone years again.
Swap rates – the rates at which lenders lend to each other – hit a high in July of 5.208%, but they have now started to settle down again, to 3.621%.
Many mortgage holders struggled with affordability due to the increase when they came to remortgage, with a 30% increase in mortgage arrears. We also saw major banks withdraw their mortgage offerings, further reducing the options available for buyers and remortgagers.
The Bank of England’s Financial Stability Report, published on 6th December, said that around 900,000 borrowers are set to see their monthly repayments increase by about £500. Around 20% of these could see a monthly increase of more than £1,000.
However, Governor of the Bank of England Andrew Bailey expects that the base rate will stay at 5.25% for some time.
Rental Update
Rents have been on the increase for a while now, but in the wake of regular mortgage increases, rent increases have also been rising steadily, as landlords struggle to make ends meet. And it’s not just the mortgage increases that have pushed rents up – competition at the moment is huge. With landlords leaving the sector, demand is outstripping supply, leaving tenants having to offer more in order to secure a home.
But rent arrears are higher now than they were during the pandemic with 66% of respondents to a survey of housing associations struggling to make their rent each month.
This has created a vicious cycle, with both landlords and tenants floundering and that has had an impact on landlords abandoning the sector. By summer of this year, there was a 120% increase in landlords leaving the sector.
While there are other reasons that landlords are citing for giving up on property, the rising costs are a heavy burden, seeing landlords dipping into their own savings to cover payments.
Rental Reform Bill
There have been many twists and turns with the Rental Reform Bill and the end isn’t quite in sight…
While it seemed that this was the year that the Bill would make significant strides forward, it seems to be lurching towards some fairly major changes. In November 2023, the bill went to the committee stage with nearly 300 proposed amendments, across 146 pages, to the original bill.
New sections are to be added around Decent Homes, discriminatory advertising practices and the promised possession ground for student landlords.
While landlords feels that the rental reform bill prioritises tenants, there is some good news as the ban on no-fault evictions has been kicked into the long grass. Landlords have been worried about losing no-fault evictions for a while now, but ministers have decided that the courts need to be reformed BEFORE this can happen, so that they can handle evictions going forward.
However, while there’s a list of what those updates to the court system will entail – from digitisation to more bailiffs – there are no numerical targets, so it makes it tricky to guess when the ban might be back on the table. So watch this space!
