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Landlord News
Looking ahead to 2023, we’ve put together our market predictions for the sales and lettings markets in Leeds.
When it comes to lettings, we expect the current trends of high demand to continue, leading rents to increase by 7% in 2023, slightly lower than the 10% year-on-year increases over the last few years.
In terms of sales, we predict a slowdown in the housing market in 2023, rather than a crash, and expect property values to fall by approximately 8% due to increased interest rates, which follows several years of high price growth.
Luke Gidney, Managing Director at HOP explains:
Rising interest rates have disrupted the property market in recent months and although further increases are likely, we don’t expect them to go as high as some forecasts. We predict interest rates will peak at around 4% in 2023.
“The property market is very much linked to confidence in the economy, as well as employment, interest rates and the supply of housing stock. Employment rates are high with more job adverts than workers available, and there’s still a shortage of property available for sale, which will help to support prices.
“Although the cost of fixed price mortgages soared following the mini-budget, they are now falling again and should stabilise early next year as more products become available, which will give borrowers a greater degree of certainty. Borrowing costs will still be higher than what we’ve become used to over the last 15 years or so, and with 300,000 fixed term mortgages coming up for renewal each quarter, it will be an anxious time for those who are re-mortgaging.
“Therefore, after several years of rapid house price growth, it’s likely that this spring, sold prices will be approximately 8% lower than they were at the same point 12 months ago, but it will be a slowdown in the market, rather than a full-blown crash. There will be a small drop in transaction volumes and this will mean a slight reduction in asking prices, down around 5% in 2023.
Overall, we still expect January 2023 to be a busy time for home sales in Leeds, with an influx of new properties expected to hit the market as many people have been holding off in the run up to Christmas. Statistics show that the New Year is the best time to list your property for a speedy sale, so if you are thinking of selling in 2023, then HOP is here to help with our top tips on how to wrap up your sale this winter.
“The growth we’ve seen in recent years will give sellers more room to negotiate on their asking price though and we will see a shift to an environment that favours buyers. This could be good news for some, including cash buyers and first timers, especially now that the Help to Buy scheme has come to an end.
“Ultimately, things will be calmer, and the market will level out in 2023, making the role of an experienced estate agent, with strong local knowledge and accurate marketing advice, more important than ever for sellers looking to negotiate an evolving market.”
The shortage of rental property looks likely to continue, as demand for rental property is up by 10 to 12% nationally.
The increased demand is caused by a number of factors including: people who have delayed buying remaining in rented accommodation; and high numbers of landlords selling rental properties during the recent property boom (in response to increased red tape and eroding margins), resulting in a lack of good rental stock overall. This has driven rents up 10% over the past 12 months in West Yorkshire.
Tom Wild, who heads up HOP’s Pudsey office, said:
“There’s a major shortage of rental stock available which is pushing rents up and we’re expecting to see further increases of around 7% in 2023. When this is combined with soaring energy bills and the cost of living crisis, it’s likely that more tenants could slip into arrears.
“Products like our Rent Guarantee service, will be even more important during this time. In terms of void periods, we believe these will remain low, at just five days on average in West Yorkshire, due to a chronic undersupply of private rental stock, which is partly because tenants are generally staying longer in properties and moving less. If there was more housing stock available in the private rented sector it would give tenants more choice and ease the burden on rents.
“Yields for landlords will remain solid, at around 6% or 7%, but profits will be squeezed by borrowing costs. The impact of section 24 taxation on landlords, as well as new rental reforms and EPC legislation, will also mean landlords continue to sell properties, which in turn reduces the supply of rental homes and increases tenant demand.
“Currently 51% of landlords self-manage their properties in the UK, but we expect this to fall as the tax burden and complexity of new legislation means more landlords will opt for professional letting agents to manage their portfolios.”
