Thinking of moving in 2023? Here's what you need to know about the market

Thinking of moving in 2023? Here's what you need to know about the market

What can sellers, buyers and landlords expect from the new year?

2022 – it was a seismic year in the property market with significant political and economic earthquakes rocking the industry as well as more specific aspects coming into play, such as the new law on interlinked fire alarms for all Scottish homes that came into force on February 1st 2022.

Based on last year, it would be hard to lay any big bets on what may happen in 2023 with any confidence, but here are our thoughts on what could be key topics this year that may occupy the news space.

Market forces

Rightmove forecasts that, depending on the type of property, asking prices will, on average, drop by 2% in 2023*. As this is a national average housing market activity and house price changes will vary depending on where you are selling or buying. Overall, we can expect to see a more level market with fewer peaks and troughs.

As buyers wait for prices to drop and sellers look for the closest price match to their desired sales price, Rightmove suggests that it may take buyers in England around 60 days to complete the buying process on their new home. In Scotland, this process tends to be faster.

For landlords, there are many considerations they will need to weigh up when it comes to continuing with buy-to-let and thinking about buying additional properties. On the one hand, letting a property has more challenges than ever, with the increased cost of living, rising mortgage costs and additional legislation to cope with.

However – demand from tenants for a place to rent continues to rise, fuelled in part by many first-time buyers putting plans on hold and opting to rent instead until the economic climate improves their personal circumstances. This demand is far from being met by the current supply of available rental property. Not only does this mean that letting a property is quicker than ever, but rental prices are being pushed upwards to record levels, currently averaging £1,174 across the UK and £840 across Scotland^. The chance to generate a good yield is still there for landlords, if they invest in the right properties and locations.

If you are thinking of investing in buy-to-let, why not read our Guide to Investing.

Curious to know if the value of your property has changed?

Will the growth in the lettings market continue?

Although the supply of rental properties is slowly improving (22% higher than in 2022), the number of rental properties available is still 21% lower than pre-pandemic levels.* This, combined with high tenant demand, is driving up rental asking prices that, on average, increased by 10.4% in 2023, and are 28% higher than in 2019.* 71% of landlords, who were surveyed in the second half of 2023, confirmed this increase in demand and, as a result, are finding that void periods and time to let agreed are down.* Based on these numbers, the current expectations for the lettings market are that renters will stay put for longer, and that there won’t be a drastic increase in supply.*

Looking at the HomeLet Rental Index Report, the numbers continue to confirm the continued growth. Average rent across the UK now stands at £1,268 pcm, which is an 8.01% annual increase.** Scotland’s experiencing the highest annual growth in rental prices with 8.45%, while Wales is slightly below the UK’s average, with an annual increase of 7.7%. This means that in Scotland, average rental prices are £911 pcm and tenants are, on average, spending 28.8% of their income on rent.** In Wales, the average rent is £866 pcm, which makes up 34% of a tenant’s income.**

What lettings legislation do I need to keep an eye on?

In Scotland, on 1 April 2024, the extended Scottish Act legislation, which introduced the rent increase cap and a pause on some evictions is due to come to an end. “Until then, private rents are capped at 3% - or 6% in exceptional circumstances.”^

At the time of writing, no other changes in the Scottish or Welsh lettings legislation has been brought forward.

For England, one of the main points of discussion for landlords will most likely be the Renters (Reform) Bill. The Bill had its second reading in October 2023, and has been through the Committee stage; it’s set to pass in 2024. However, before the Bill finally becomes law, it will almost certainly be subject to change as its progress through parliament continues. Stay up-to-date on the current status in our live blog here.

Additionally, the new Right to Rent code of practice came into effect in England only on 22 January 2024. This means that English landlords and agents who do not comply with the Right to Rent laws may face higher fines. Note that tenants do not need to prove their right to rent in Wales or Scotland.

What could your home sell or let for?

Sources
*TwentyCI and TwentyEA Reporting December 2023 ; Paragon Bank 2023
**Homelet Rental Index Report [1] ; Rightmove HPI [1]
^https://www.gov.scot/news/continuing-rent-protection-for-private-tenants/
MKT/UKON/010124

Correct at time of publishing – 19/01/23

ALL MORTGAGES ARE SUBJECT TO STATUS AND LENDER CRITERIA.

MOST BUY TO LET MORTGAGES ARE NOT REGULATED.

A BROKER FEE MAY BE PAYABLE UPON MORTGAGE APPLICATION AS WELL AS AN ADMINSTRATION FEE. THE TOTAL FEE PAYABLE WILL DEPEND ON YOUR CIRCUMSTANCES. YOUR MORTGAGE CONSULTANT WILL EXPLAIN ANY FEES APPLICABLE IN YOUR INITIAL APPOINTMENT.


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