Here is the latest edition of the Property Options’ monthly update on the UK Buy To Let (BTL) market.
The fallout from the EU referendum continues to dominate the agenda on the UK economy – but how does this affect the Buy To Let (BTL) market and what are the other factors in play?
The Bank of England (BoE) has cut interest rates to a new record low of 0.25%.
This is the first change in the bank rate for more than seven years. The bank has also announced the purchase of £10bn of corporate bonds and £60bn of government bonds in a new funding scheme for banks. These measures are designed to support growth and achieve the 2% inflation target.
As reported in the Daily Telegraph, Philip Hammond, the new Chancellor of the Exchequer is now charged with steering the UK economy through the uncertainty caused by the country’s looming exit from the EU.
His most pressing task is to avert an economic downturn that could follow the Brexit vote as companies cut back on investment while they wait for the dust from the referendum to settle. The new Chancellor has said he may use the Autumn Statement to “reset” Britain’s economic policy. He added that the Treasury will act “if we deem it necessary to do so.”
Following Mr Hammond’s statement, figures from IHS Markit’s Purchasing Managers’ Index revealed a “dramatic deterioration” in economic activity in the services and manufacturing sectors in July, which fell to the lowest level since April 2009.
This rather pessimistic view has been echoed in the results of an economic forecast from the British Chambers of Commerce (BCC). This forecasts a cut in the growth in Gross Domestic Product (GDP) from 2.2% to 1.8% this year and a further slow down to 1% next year, the weakest since 2009.
Adam Marshall, the Acting Director General of the BCC commented “The UK is likely to avoid a recession but with the health warning that that businesses are still digesting the results of the EU referendum and the challenges and opportunities to come.”
The latest statistics on house prices from the Office for National Statistics (ONS) indicate that the annual growth in house prices fell by 9.7% in June to 8.3% in July. On a monthly basis property prices edged up by 0.4% between June and July.
Jonathan Hopper, Managing Director of Garrington Property Finders described the results as “another dose of robust data” and said that “the post – Brexit bounce us starting to look less like a blip and more like business as usual for house prices”.
Rents continue to present a fairly positive picture for BTL landlords. The latest Homelet Rental Index shows that rents are still rising but the growth is slowing. The average rent in the UK in August was £913 pcm. This is 3.1% higher than the same period last year but a reduction in the annual rate of increase to August 2015 of 5.6%
So, it’s a mixed picture for the UK economy and a generally positive one for the BTL market. Philip Hammond, the new Chancellor, is reported to be taking a keen interest in the housing market. We await his Autumn Statement on 23 November, with interest.
We will all be discussing the latest position on the property market at our next PIM on 29 September 2016 at Holiday Inn, Bristol City Centre, 6-9 pm.
We hope you will join us then.
For more info and to reserve your place Click Below