With stamp duty rates changing for many buyers from 1st April 2025, many movers are stepping up their search for a property at a traditionally quiet time in the market. This sentiment was reflected in Rightmove’s November House Price Index. The portal said the number of sales being agreed is 26% higher now, when compared to the same period in 2023.
Momentum may be swinging back towards first-time buyers. This is partly due to the type of stock coming up for sale. In November, Zoopla revealed 32% of homes across its portal were chain free. Analysts cite landlords exiting the market as one reason for an influx of one- and two-bedroom properties.
Buy-to-let yields edge upwards
Landlords keeping faith are being rewarded, reports Paragon Bank. Its latest analytics revealed an average buy-to-let yield of 6.72% in September 2024. This is a steady rise on the previous quarter and the previous year.
HMOs the heavyweight performers
The best rental yields were achieved by HMOs (Houses in Multiple Occupation) at 8.34%. This was followed by freehold blocks at 6.66%. Flats and terraced houses achieved yields of 6.02% and 5.94%, respectively.
These yields have been largely tied to rising rents. The latest HomeLet Rental Index showed the average UK monthly rent is £1,327. Although this represents a marginal 0.3% reduction since the last monitoring period, rents are now 3.4% higher than last year.
It is fitting that news on how we heat our homes also emerged in November, when parts of the UK were blanketed by a layer of early-winter snow. First up was a detail contained within Labour’s Future Homes Standard. The Government wants to ban gas fired boilers in all new homes by 2027.
The move is part of a wider initiative to reduce carbon emissions. Housebuilders would be forced to drop gas boilers in favour of eco alternatives, such as air source heat pumps. It is thought an official announcement could come as early as May 2025, with implementation in 2026.
The Scottish Government also made a home heating announcement in November. In an about turn, it said it was dropping planned restrictions on the installation of wood-burning stoves in new builds and conversions. The New Build Heat Standard was amended to allow ‘the installation of bioenergy and peat main heating systems - and any type of secondary heating systems’. Mains gas and oil boilers as a main heating system will still be banned.
Fuel bill fluctuations ahead
Ofgem also used November to announce that the energy price cap is being revised. The cap will increase to £1,738 for the period 1st January and 31st March 2025. This is expected to add £21 to the average three-month billing period.
Those with a keen interest in the rental market may be following rent control practices in Scotland. There have been caps in controlled areas north of the border since 2022 and the model has been much maligned since its introduction. The Scottish Government has yet to find the winning formula, with more tinkering planned.
Rent increase revision proposed in Scotland
Passing through Holyrood is the Housing Bill and an amendment during Stage 2 has been proposed. Rent increases to homes in rent control areas would be revised to between CPI (Consumer Price Index) + 1% and CPI + 6%. This would replace the current and convoluted ‘market difference’ system.
Finally, leaseholders awaiting reforms may have to wait longer than anticipated. Housing Minister Matthew Pennycook MP announced the Leasehold and Commonhold Reform Bill won’t be introduced to Parliament until the second half of 2025. Leaseholders can expect a White Paper and consultations ahead of its introduction.
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