2024 was a tumultuous year for many, with the general election, a budget date that encouraged many people to put transactions on hold and a significant amount of economic turmoil.
Despite everything, our robust mortgage market continued to grow and expand.
This year has started much as last year left off, and there is a definite feeling of cautious positivity, especially following this month’s rate reduction.
However, there is also a growing need to look after landlords to ensure they provide the healthy private rental sector (PRS) the country so badly needs.
Tentative positivity
We have seen something of a rate war at the start of this year, with lenders across the board lowering rates. With cost pressures and rates looking like they will continue to ease, the outlook for 2025 is a gradual improvement in mortgage affordability.
How the housing landscape is set to shift
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This should lead to steady market growth.
The UK Finance Mortgage Market Forecast, released in December, predicts that both new residential lending and remortgaging will increase this year, building on the positive growth from 2024.
Supporting both buyers and landlords
The picture for buy to let (BTL) is a little more mixed, however. While remortgaging is likely to increase this year, the expectation for new purchases is uncertain.
The government is pushing to make it easier for first-time buyers to get on the housing ladder. While this is welcomed by all those who want to buy a home, for those people who either need or prefer to be tenants, it means we also need to look after the landlords that make up the PRS.
We cannot tax and regulate them into oblivion, as there is no way that the state sector could possibly accommodate all those who need it.
There is already a huge shortage of rental property, leading to escalating rents, and some tenants are now gazumping one another in order to secure somewhere to live. This should act as a warning sign for the market. We need the valuable property provided by the PRS.
There is much talk about evening up the market in favour of tenants – and first-time buyers – but if it is altered too much, some landlords investing in property and providing much-needed homes may decide to leave the market.
There is definitely a line to be struck between being fair to tenants and recognising the investment that landlords make.
We need to make sure the pendulum does not swing too far from this line.
