Estate agent reveals rental market predictions for 2024 and it’s looking bleak – but says ‘interest rates and rent costs will stabilise’
An estate agent has shared his top rental market predictions for 2024 – from why you should monitor politics closely to considering energy bills before moving house.
Ruhul Shamsuddin, founder of Lordsons Estate Agents in Southend-on-Sea, has over a decade of experience selling and letting homes.
With rising costs across the country, many renters and landlords feel uncertain about the future of the market.
According to Ruhul, who is also a portfolio landlord with commercial, residential, and HMO properties, there are more tumultuous changes to come.
“The dawn of 2024 heralds a challenging yet dynamic landscape for landlords and renters alike,” said Ruhul, who is also known by his moniker, the ‘Big Silver One’ in the real estate sector.
MORE LANDLORDS WILL SELL-UP
A whopping 25% of landlords have expressed intentions to sell a property by August 2024, according to a report by Lordsons.
Soaring mortgage rates continue to squeeze them out of the market, minimising returns on investments, among other factors such as capital gains tax allowance.
Ruhul said: “Given that the 2024 market landscape is expected to mirror the preceding year, it is unsurprising that landlords continue to weigh their options.
”While some landlords may endure, a potential deterrent is the further reduction of the capital gains tax allowance in April 2024, decreasing from £6,000 to £3,000.
”In March 2023, the CGT allowance stood at £12,000 and these alterations have substantially heightened tax obligations for many landlords who have opted to sell recently.
”Despite these challenges, only three percent of landlords are planning property purchases in 2024, according to our research.”
RENTING WILL BECOME EVEN MORE EXPENSIVE
Ruhul also predicts that the cost of renting has hit a peak but will continue to rise in some areas but at a slower pace.
He said: “While further escalations are anticipated in 2024, it is evident that many tenants will face challenges in coping with higher monthly rental costs.
“Data provided by estate agents indicates that average rental prices reached their peak in August 2023, gradually moderating throughout the remainder of the year.”
IT’S ALL ABOUT POLITICS IN 2024
With the general election expected to take place this year, Ruhul says this is likely to have a huge impact on the future of the rental market.
Ruhul said, “Given the substantial number of landlords and tenants across the nation, politicians are likely to address various issues affecting the rental market, aiming to secure votes.
“The Conservative Party is anticipated to emphasise its commitment to advancing the ‘better deal for renters,’ incorporating proposed rental reforms, as part of their bid for another term in government.
”Meanwhile, the Labour Party has outlined the prioritisation of ending Section 21 evictions, with hints of potential additional measures such as compulsory licencing and rent controls if they were to secure victory in the election.”
Anyone looking to buy or rent a home should pay close attention to the new policies and legislation put forward.
Such as the Renter’s Reform bill, which was introduced in May 2023, which outlined intentions to prohibit Section 21 evictions, simplify the process for tenants to request permission for pet ownership, and eliminate fixed-term tenancies.
Since its introduction, the bill has progressed through a first and second reading, along with a committee stage.
Ruhul said: “Prior to the committee stage, there was a notable reversal by the government: Section 21 evictions will not be eliminated until reforms are made to the justice system.
”In 2024, there is the potential for these proposed reforms to move closer to becoming law.
”The upcoming general election may introduce further delays and uncertainties.”
ENERGY BILLS = RENTAL CONCERNS
Ruhul says that energy efficiency and the cost of bills are also likely to be a factor.
In September, the Prime Minister unexpectedly announced the abandonment of proposals to raise the minimum energy efficiency standard for rental properties in England and Wales.
This brought relief to landlords concerned about the potential costs of updating homes.
But Ruhul says these upgrades are still on the agenda.
He said: “The persistent challenge of rising energy bills for both landlords and tenants, coupled with the escalating concerns about climate change, makes the issue pertinent.”
TAX WILL GO UP, BUT INTEREST RATES WILL STABILISE
The estate agent also predicts that tax costs will keep rising.
He said, “Despite the National Insurance tax break for full-time landlords announced in the Autumn Statement, the combination of frozen income tax thresholds and the repercussions of Section 24 changes will result in an ongoing increase in HMRC bills for many landlords in 2024.”
But Ruhul believes that interest rates will stabilise this year.
He said, “While interest rates have shown some stability, the observed increase in mortgage repayments highlights the nuanced challenges that landlords continue to face in managing their financial obligations within the property market.”
In 2023, additional selective licencing schemes were introduced.
The trend is set to continue in 2024, with ongoing consultations for new schemes currently underway, according to Ruhul.
He said: “This indicates an increased focus on refining and expanding licencing frameworks for landlords, suggesting a proactive approach to addressing housing and community-related concerns.
The estate agent revealed that regulation for the short-term rental market is currently in the pipeline.
He says this is to address concerns related to property usage, community impact, and the overall functioning of the short-term rental market.
Finally, Ruhul anticipates that buy-to-let mortgage rates will continue to gradually decrease.
He said, “Landlords who remortgaged in 2023 encountered notably higher monthly repayments, and this trend is expected to persist for those renegotiating deals or expanding their property portfolios in 2024.”