Read an interactive and user-friendly version of this guide below.
Despite a testing time for the UK economy over the past few years – including an ongoing cost-of-living crisis and the Bank Rate currently at a 15-year high of 5.25% - the property market has continued to defy most forecasters.
And although average price growth has now dipped into negative territory and values are likely to continue to fall slightly over the next year, there is no sign of the crash that many forecasters predicted at the end of 2022. Meanwhile, rents for landlords have maintained excellent growth, with the UK average for the 12 months to October 2023 at 6.1%, just outstripping inflation.
For more on what’s happened this year, see our annual month-by-month round up of what 2023 meant for landlords.
But now, with a general election on the horizon and the Renters (Reform) Bill making its way through Parliament, should landlords sell up or buy more properties in 2024? What will happen if you need to remortgage? And who should landlords vote for at the next election?
Forecasters are predicting that although there will likely be further price falls in 2024, they will recover and should have risen at least in line with inflation in five years’ time. At the same time, there should be some bargains around, particularly in the first half of the year, as motivated sellers look to agree a quick sale before the value of their property potentially drops.
So, investors that research an area properly should be able to find a good deal that will then grow well in value over the medium to long term.
On the letting front, rental demand isn’t going anywhere. Mortgage and tax pressures and uncertainty over rental reforms, combined with natural attrition as landlords move into retirement, means investors will continue to exit the market. There is already a shortage of stock across much of the UK, particularly in major cities, and rents are forecast to continue to climb at between five and six percent through 2024.
All this means that if you are able to buy the type of property that’s in demand, in the right location and at a good price, you should be able to secure better than average rental returns.
For more detailed information, head to our Economic and property market update for 2024.
As it stands at mid-December 2023, the Bill has reached the Committee stage, where all the clauses and proposals for change are analysed by a select group of MPs, who also hear and take into account evidence from various interested parties. Once the Committee has reported to Parliament, all proposed amendments will be debated until a final draft can be agreed.
The leading industry body, Propertymark, gave evidence at the recent Committee stage of the Bill’s progress through Parliament and says its members are concerned about the private rented sector becoming ‘increasingly hostile’ to landlords and agents.
The biggest issue is the proposed abolishing of Section 21 because landlords are simply not confident that the grounds for possession under Section 8 give them enough protection. With many grounds remaining discretionary, the potential cost of evicting a tenant through the courts and length of time that could take are a major concern.
And 93% of letting agents surveyed by Propertymark said the removal of fixed-term tenancies would negatively affect landlords and agents – especially those in the student rental market, which relies on fixed-term agreements to keep the availability of properties in line with the academic year.
The next debate of the Bill is likely to take place early in 2024 and we expect it may take some time to achieve a final draft – one hurdle being that Michael Gove has already made it clear that the current government won’t move ahead with getting rid of Section 21 until the court system has been improved.
In contrast, Angela Rayner for the Labour Party has said that notwithstanding problems with the courts, they would be looking to remove Section 21 from their first day in office. So, whatever happens over the next few months, with a general election imminent, everything could change and the Bill itself in its current form could even be scrapped.
To find out what’s currently included in the Bill and for all the latest developments, visit our dedicated Renters (Reform) Bill hub.
In his Autumn Statement 2023, the Chancellor announced that Local Housing Allowance will be increased to cover the lowest 30% of local rents. That will give around 1.6 million households an average of £800 a year in extra support from April 2024.
Other measures coming into effect in April to help tenants on the lowest incomes include:
And all workers should see a slight improvement in their take-home pay, as a result of cuts to National Insurance.
All these changes should help tenants, particularly those receiving benefits, to afford their rent and reduce the chance of landlords having to deal with arrears. Read more about renting to tenants on Universal Credit and housing benefit.
The positive news for landlords is that the compulsory Class 2 National Insurance charge (currently £3.45 a week) has been abolished for self-employed tax payers from April 2024, and the cost of Class 4 contributions will drop from 9% to 8%.
However:
Find out more about taxation for UK landlords in our complete guide to UK landlord tax.
For the past few years, the Government has been stating its intention to raise the minimum EPC rating to legally let a home from ‘E’ to ‘C’. That was originally due to come into effect for new tenancies from 2025 and all tenancies from 2028, which would have made 2024 a ‘crunch’ year for landlords to make any necessary improvements to their properties.
However, in September 2023, Prime Minister Rishi Sunak announced that these plans were to be scrapped, with landlords and homeowners instead simply encouraged to upgrade energy efficiency where possible.
Meanwhile, in Scotland, the 2025 deadline for rented homes to achieve a minimum ‘C’ rating for new tenancies has just been dropped. A new draft bill is now only proposing that all tenancies meet the ‘C’ rating by the end of 2028.
While we are awaiting confirmation and clarification on the plans for England, it’s important to bear in mind that tenants will be attracted to homes that are easier and cheaper for them to heat, so it’s well worth making improvements where you can. And, of course, if Labour comes to power at the next election, they may well reintroduce the raising of minimum EPC standards.
See our ‘Ultimate guide to having an eco friendly property’ for information and advice.
The Prime Minister can call the next general election any time between now and 17 December 2024, with 28 January 2025 being the last date it can be held. As at December 2023, Rishi Sunak has not made any announcement, but we do expect an election in 2024.
The biggest impact on the property market would be a change of party at the top, in which case landlords may find themselves under extra pressure.
Labour has created its own Renters’ Charter, which is even more focused on tenants’ rights than the Renters (Reform) Bill. These plans for reforming the private rented sector were announced in September 2022 and reiterated at the party’s recent conference. They include:
Labour has also committed to upgrading every home to EPC standard C “within a decade”, which may mean requiring private landlords to meet that minimum rating sooner.
For more on this, read our ‘Economic and property market update for 2024’.
The biggest determiner of mortgage rates is the Bank of England base interest rate, which has been increased over the past couple of years in an effort to combat double-digit inflation.
Between December 2021 and August 2023, it rose from a historic low of 0.1% to a 15-year high of 5.25%, where it now sits.
As a result, mortgage interest rates have been climbing over the past 18 months or so, hitting six per cent plus – a huge shock to borrowers, especially those coming off five-year fixed rates of just one or two per cent. However, thanks to the Bank’s decision not to raise the base rate further since August, lenders have started to bring their rates down in the final quarter of 2023.
Two and five-year fixed rates for buy to let mortgages are now available from a number of lenders at under five per cent, with the potential for lower rates for properties that have an EPC rating of A-C.
With inflation expected to get back to its long-term average of around two per cent in 2025-6, we should see the Bank of England start to bring the base rate down in 2024. Some forecasters only expect a marginal drop by the end of the year, but others, including Zoopla, believe it could go down to 4.5%. And although it’s not predicted to get down as low as three per cent until 2027, this should still encourage lenders to offer more competitive deals in 2024 – particularly five-year fixed.
Sources:
Sources: Savills, NIESR, Zoopla, OBR, PwC, JLL
In February 2022, the National Trading Standards Estate and Lettings Agency Team (NTSELAT) published Part A of their guidance for sales and letting agents, outlining what ‘material information’ needs to be published on property listings.
So, by May 2022, all listings had to include a property's council tax band or rate, the property price or rent and tenure information (sales).
In November 2023, Parts B and C were published. Under Part B, all property listing should include:
Part C is information that only needs to be included if the property is affected by the issue, for instance:
If you use a sales or letting agent to market your property, check they make sure listings follow this guidance, with changes expected to be reflected on property portals by the end of 2024. If you are carrying out any marketing yourself, NTSELAT has helpful guides for sellers and landlords, and buyers and tenants.
There are two things for landlords in Scotland to be aware of in the coming year:
This may not take effect in 2024, but it is certainly something to be aware of. It’s also a reminder that landlords should be very careful about discriminating against tenants for any reason other than them not satisfying referencing and credit check requirements.
For a reminder of all the changes that took place in 2023, see our month-by-month round-up of what 2023 meant for landlords.
Property investment shows, which offer free entry and free seminars, give landlords the opportunity to meet and hear from key industry experts and companies and are a great way of staying up to date with the latest developments in lettings.
Total Landlord’s Chief Commercial Officer and founder of our eviction and housing law partner, Landlord Action, Paul Shamplina, is a regular speaker and expert panel member at these events, and has won Best Seminar Speaker at the Landlord Investment Show Awards three times.
Here are some of the key show dates for your diary in 2024:
National Landlord Investment Show
For full details, see the National Landlord Investment Show website.
Property Investor Show
Register to attend at the show website.
