November Newsletter - How will the general election affect the property market?

In this month's edition, we kick things off with a look at how December's general election could affect the property market.

We also reveal the average age of first-time buyers in 2019, reports suggest that mortgage rates remain competitive which is excellent news for borrowers, and finally, if you're a landlord, why not read our guide on preparing your properties for winter?

How will the general election affect the property market?

Over the past few years, Brexit has dominated the political landscape of the United Kingdom, but for the next month the general election will take up the headlines. Here, we investigate what the general election, and its result, could mean for the property market.

With the property market performing well over the past month, with a particular uptake in the last quarter, there is hope that the general election may bring with it yet more good news as potential vendors and buyers are buoyed by the stability of a new Prime Minister. In previous general elections in 2010, 2015 and 2017, an uptick in sales volumes was reported across the property market and Nedbank, the private wealth firm, has stated that they expect a significant impact on the property market following the election.

As it stands, the two main frontrunners in the general election are the Conservative party and the Labour party, both of which may well have to rely on other political parties if they fail to reach a majority.

The Conservative Party – Focus on First-Time Buyers
As the party already in power in the UK, should the Conservatives win the vote then the biggest effect on the property market will almost certainly be the break from Europe which Boris Johnson has been working towards since taking over as Prime Minister. For months, many have been predicting a flood of property transactions as soon as Brexit is agreed thanks to the people who have been waiting to buy or sell simply due to the political uncertainty – with Brexit completed, transactions should increase in the property market.

Further to Brexit, the Conservatives have pledged to create up to 100,000 new starter homes with a 20% discount for first-time buyers under 40 years of age in order to continue with the momentum that has been seen over the last two years amongst this group. They will maintain the Right to Buy scheme which will continue to see the number of council-owned properties declining, and the rental market fluid.

This should come with a note of caution, however, given that Whitehall’s spending watchdog recently discovered that the party has failed to build any of the 200,000 starter homes promised in 2015’s party manifesto.

The Labour Party – Mansion Tax
Labour has plans to shake up the property market on a bigger scale, and this is no more evident than with their proposed Mansion Tax where property owners whose homes are worth more than £2m would face an annual charge, based on the value of the property. In line with this, those who own second homes would pay higher rates of tax, as well as those who own properties which are empty or owned by non-residents of the UK.

In terms of first-time buyers, Labour has pledged to build 200,000 homes a year in order to keep the market fluid and meet the demands of an ever-increasing population who have recently faced under-supply.

Mortgage market remains competitive for buyers

Whilst the mortgage industry continues to face difficulties when it comes to finding good returns, borrowers are continuing to benefit from low rates, according to the latest month-on-month data.

Moneyfacts.co.uk has discovered that competition within the market is continuing unabated, with rates for two-year fixed mortgages dropping just 0.01% to 2.44% and the average rates for three and five-year fixed mortgages staying still at 2.60% and 2.75% respectively. The biggest drop in rates was seen for 10-year fixed mortgages, but with the decrease sitting at 0.07% and the rate shifting to 2.91%, this hardly represents a significant fall.

Mortgage fixed rate analysis

Mortgages	Two year fixed	Three year fixed	Five year fixed	Ten year fixed
Six months ago	2.47%	2.66%	2.85%	3.00%
Last month	2.45%	2.60%	2.75%	2.98%
Today	2.44%	2.60%	2.75%	2.91%

Savings fixed rate analysis (£10,000 investment tier)

Savings	One year fixed	Two year fixed	Three year fixed	Five year fixed
Six months ago	1.46%	1.63%	1.84%	2.15%
Last month	1.31%	1.41%	1.56%	1.88%
Today	1.29%	1.36%	1.51%	1.77%

“It appears that fixed mortgage rates are continuing to be cut despite the rise in interest rate SWAPs, a market that lenders generally use to hedge themselves against future interest rate fluctuations,” offered the website’s finance expert, Darren Cook. “The significant increase in SWAP rates indicates that markets may now be clawing back a previous factoring of a forecasted Bank base rate cut in the short term.

“The current average two-year fixed rate is currently 2.44%, however, this average rate reached its historical low of 2.20% two years ago in October 2017, so the current drive by some mortgage providers to cut rates could be a conscious strategy to make sure that they retain the borrowers who may be maturing from a very low fixed rate secured two years ago.”

What's the average age of a first-time buyer in 2019?

With the first-time buyer mortgage market reaching its highest level since 2007, there can be no doubt that over the last couple of years, first-time buyers have experienced something of a resurgence in the property market. However, with this demographic having different priorities than seen previously, what is the age of the average first-time buyer?

In August this year, there were over 35,000 new home buyer mortgages completed, up 0.7% from the same point last year according to data from UK Finance. Although many of these buyers may have been supported in some way by family members, with recent statistics showing that almost a third of first-time buyers received some financial support from the Bank of Mum and Dad, the outlook is bright for those looking to join the property ladder.

“The main affordability constraint continues to be the need to find a large deposit, with the average first time-buyer mortgage advance being only 77.9% of the purchase price, with the remaining 22.1%, nearly £50,000 on average, having to be paid upfront,” commented Mike Scott, chief property analyst at full-service estate agent Yopa.

“These figures suggest that buyer activity in the housing market is still holding up well, especially among first time buyers, despite the continuing political uncertainty. The total number of home sales in the year should be close to 1.2 million, only slightly down on the average for the past five years,” he added.

Interestingly, the average age of first-time buyers in this climate is actually increasing, with the average of 30 years old back in January now reaching 32 years of age. The average age of a buyer hovering at around 30 years old, is in line with the recent change in activity as first-time buyers look past one-bedroom apartments and studios, to three-bedroom houses for more longevity in their purchase. Analysis by Zoopla has shown that two thirds of first-time buyers sought a house rather than a flat, with 42% looking for a three-bedroom home.

Richard Donnell, Zoopla research director, noted that: “First-time buyers are thinking about staying in a property for 10-12 years rather than a shorter period. They’re aiming higher and want to save up and get a first home they can grow into.”

Landlords - prepare your properties for winter with our guide

As we head towards the Winter months, now is the optimum time for landlords to prepare for the potential issues that may arise from the harsher weather. Spending a little time and effort now may well save money further down the line in the event of an accident or repair cost. Here’s our list of essential landlord checks;

Boiler Service
The number one priority for every landlord should be checking that the boiler in your property (or properties) is in good condition, as repair costs can be extremely expensive. Book a boiler service to ensure that everything is working correctly and safely as boilers can break down with the surge in gas consumption that comes in the colder months.

Protect the Pipes
Adding lagging to your pipes (specially designed pipe insulation) is an inexpensive measure which will give you peace of mind knowing that your piping will not burst due to freezing and splitting. Focus on pipes in external areas and lofts which may be subject to the most extreme temperatures and you should avoid any problems as the cold sets in.

Smoke and CO Alarms
In line with regulations from October 2015, a smoke alarm must be installed on each floor of a rental property – now is the perfect time to double check these are in good working order and that your tenants are safe in your property. If your rental property has a fireplace (or solid fuel appliance) then additional carbon monoxide alarms must be fitted in the same room, as the chances of these items being used increase astronomically in winter.

Open Dialogue
One of the key pieces of advice that we can give to protect your property through the winter is to create healthy dialogue with your tenants. As they are living in the property day-to-day, they will be able to advice on any niggles so that you know how to avoid any larger issues. Make sure your tenants know where the stopcock in the property is, where the fuse board is located and who to call in case of emergency, and they could be invaluable in saving you time and money.

Protect the Roof
Chipped, cracked or dislodged tiles on your roof could lead to significant water damage and in cold temperatures this can lead to structural issues with water freezing and expanding. Double-check that your roof is in tip-top condition, and whilst you’re at it take the time to clear out your gutters to avoid blockages when the inevitable rain falls.