Blog Post No. 213
Climate Conscious Shift, Market Transformations, Chancellor’s Initiatives – 21st Nov Property Bulletin
Climate Consciousness and Britain’s Property Market:
A Transformative Shift
In the midst of the climate crisis, the landscape of Britain’s property market is undergoing a significant transformation. Anna Tyzack explores how climate considerations are becoming a pivotal factor for homebuyers, reshaping not only how we live but where we choose to reside.
Research indicates that climate change is set to impact the UK’s regions differently, with areas like Cheshire and Merseyside being viewed as lower-risk alternatives compared to vulnerable counties like Kent and Somerset. The shift in buyer preferences is already evident, with properties on high ground and hilltops gaining value, signaling a growing climate consciousness among buyers.
While climate awareness is currently more focused on the “how” of living rather than the “where,” there’s a recognition that the housing sector itself contributes significantly to the UK’s carbon footprint. Approximately 40 percent of the country’s carbon footprint and greenhouse gas emissions stem from the housing sector, necessitating a broader commitment to sustainability.
Buyers are increasingly prioritizing energy efficiency and resilience to extreme weather when evaluating properties. The once-overlooked Energy Performance Certificate (EPC) is gaining prominence during the selling process, with buyers showing a keen interest in energy sources and environmental considerations. Savills reports that around 59 percent of homebuyers are willing to pay more for properties with a significant proportion of renewable energy.
At the forefront of sustainable practices are developers in the luxury property market. Notable examples include the Chelsea Barracks neighborhood in London, constructed with longevity and energy efficiency in mind, and The OWO, a redevelopment project in Whitehall that showcases how period architecture can be future-proofed through thoughtful design and modernization.
The article emphasizes that demolishing older buildings, despite their poor EPC ratings, contributes more to emissions than rebuilding them sustainably. Recognizing the significance of “locked-in carbon” in existing structures, experts argue against the wholesale demolition of buildings as a solution.
In conclusion, the evolving landscape of Britain’s property market reflects a shift toward climate consciousness. From hilltop retreats to sustainable urban developments, buyers and developers are increasingly aligning their choices with a commitment to environmental sustainability. As the market adapts, the question remains: Can this mindset extend beyond luxury properties to create a more sustainable housing sector for all?
At London Property we have collaborated with award winning Basil Demeroutis, Managing partner of FOUR Partnership (Jeffrey its FORE but he says FOUR) to provide commercial property owners with a Sustainability health check to help them make informed decisions. Email us at firstname.lastname@example.org for more information.
Five transformative solutions poised to elevate Britain’s private rented sector, addressing critical challenges and fostering a more equitable landscape.
First on the agenda is the imperative need to address the housing shortage. Proposing to build millions of new homes, this solution aims to meet the staggering demand, potentially alleviating rental costs, fostering landlord competition, and rekindling the dream of homeownership for the younger demographic.
Next up is the Renters Reform Bill, a pivotal piece of legislation awaiting passage. This bill champions tenant rights by banning “no-fault” evictions and extending housing standards to encompass private rentals. With the promise of an ombudsman and a property portal, transparency becomes the cornerstone for a more secure and informed renting experience.
Drawing inspiration from successful models in Scotland and Ireland, the third solution advocates for the creation of Rent Pressure Zones.
These zones strategically limit rent increases in high-demand areas, offering relief to tenants grappling with the burden of escalating living costs.
To address the affordability crisis, the fourth proposal is to unfreeze housing benefit rates. By covering at least the cheapest 30% of rentals, this measure aims to restore balance and broaden the availability of affordable housing options for claimants.
Finally, a bold idea takes center stage – extending the Right to Buy from council housing to the private sector. This entails offering discounts or tax breaks to landlords, encouraging them to sell to tenants and potentially reshaping the property ownership landscape.
Collectively, these solutions represent a comprehensive strategy to tackle rising rents, enhance housing quality, and fortify tenant rights. As we envision a more balanced and improved private rental sector in the UK, these transformative measures stand as beacons of positive change.
The Crown Estate and the Grosvenor Group: London’s Pinnacle Landlords
Ever wondered who holds the crown as the richest landlord in London? The prestigious title belongs to The Crown Estate and the Grosvenor Group, commanding significant influence over prime real estate in the heart of the city.
The Crown Estate, with holdings encompassing 115,000 hectares of diverse properties, including agricultural land, forests, retail spaces, housing estates, and a substantial portion of UK beaches, boasts ownership of most of Regent Street and numerous prime locations in central London. Its crown jewel, Buckingham Palace, valued at $5 billion in 2022, adds to the grandeur. Interestingly, under the legal system, the Monarch retains the superior interest in all land in England, Wales, and Northern Ireland.
The Grosvenor Group, a stalwart in London’s property scene for over 340 years, traces its roots to the development of Mayfair and Belgravia. Led by the 7th Duke of Westminster, Hugh Grosvenor, the estate, estimated at £9 billion in 2016, has a rich history of astute property investments, shaping high-end areas like Belgravia and Mayfair.
In terms of sheer scale, the combined property control of these two entities exceeds a staggering 7.3 billion square feet, surpassing even the size of Hyde Park or Buckingham Palace.
Beyond their vast portfolios, The Crown Estate and the Grosvenor Group wield significant influence in the real estate market. From Belgravia’s luxurious properties to iconic locations like Regent Street and Mayfair, their impact is far-reaching.
As we navigate the property landscape in London, it’s evident that these landlords don’t just own land; they shape the city’s narrative, influencing pricing trends, architectural landscapes, and the overall real estate market. In a city known for its dynamic and diverse property scene, The Crown Estate and the Grosvenor Group reign supreme as the wealthiest landlords in London.
London’s Rental Market Faces Airbnb-Style Short Let Onslaught
A significant threat looms over London’s rental market as landlords contemplate a shift to Airbnb-style short-term holiday apartments, potentially pulling hundreds of thousands of rental homes out of the traditional market. Research by housing data specialist Propalt reveals that over 20% of 2,800 short-term lets in London previously housed longer-term tenants.
Propalt’s analysis also identified more than 10,000 homes owned by landlords transitioning to holiday-style rentals. According to Propalt co-founder Kieran Slinger, as these properties become available, they are unlikely to return to the long-term rental market. Extrapolating this trend across the expanding Airbnb-style market suggests the potential loss of “hundreds of thousands of properties.”
Landlords are enticed by the allure of higher returns and lower fees in the short-term rental model, contributing to a growing trend that could significantly reduce the availability of long-term lets. Estate agent Benham & Reeves’ data analysis further underscores a steady rise in short lets available on the market, particularly through platforms like Airbnb.
Propalt Head of Data Yujie Gong emphasizes the need for vigilance, stating that the level and intensity of switching to short-term lets are closely monitored. The trend of properties transitioning within 60 days of long-term rentals finishing is noted, and the impact on the long-term lettings market is expected to be substantial.
Marcus Dixon, Director of Residential Research at JLL, acknowledges the short-term switch by landlords to platforms like Airbnb during the pandemic, driven by increased demand for staycations. While there is hope for a gradual rebalance, Dixon notes that landlords might tire of the additional obligations of short-term lets and switch back.
In a significant development, several short-term letting platforms, including Airbnb, have signed a deal to share data with the Office for National Statistics. The anonymized and aggregated figures on guest numbers and length of stay aim to provide insights for policymakers.
The Short Term Accommodation Association sees this agreement as a pivotal moment, demonstrating the sector’s commitment to responsible data sharing. Airbnb emphasizes its contribution to local communities and the positive impact on the UK tourism economy, citing that typical London listings on its platform are rented for just 43 nights a year. Airbnb looks forward to updates on government consultations regarding national regulations.
As the battle between long-term and short-term rentals intensifies, London’s housing landscape faces a pivotal juncture, and the outcomes could reshape the city’s rental market significantly.
Chancellor Jeremy Hunt’s First-Time Buyer Support Package: Broker Perspectives
Chancellor of the Exchequer, Jeremy Hunt, has unveiled a comprehensive support package aimed at aiding first-time buyers (FTBs) in their pursuit of homeownership. The proposed measures include an extension of the government’s mortgage guarantee scheme and the introduction of an individual savings account (ISA) tailored for accumulating deposits for first home purchases.
Brokers share their views on the effectiveness of these plans:
Gareth Davies, Director at South Coast Mortgage Services, praised innovative ideas such as Skipton Building Society’s 100% loan-to-value (LTV) track record mortgage. While acknowledging it as a potential marketing ploy, he believes such initiatives, with refinement, could genuinely meet the needs of FTBs.
Michelle Lawson, Director at Lawson Financial, expressed concerns about potential complications arising from additional savings schemes, emphasizing the need for simplicity and clarity. She fears that new schemes might confuse FTBs seeking the best options for their circumstances.
Martin O’Callaghan, Head of Marketing at HLPartnership, highlighted the importance of robust support for first-time buyers in fostering a thriving housing market. He proposed a three-pronged strategy: financial education, government incentives to ease the buying process, and exploration of innovative and affordable housing models.
Jonathan Burridge, Founding Adviser at We Are Money, injected skepticism, criticizing what he perceived as the recycling of old ideas in new packaging. He called for a departure from traditional approaches and suggested solutions like a new home scheme with restrictive covenants, a Capital Gains Tax (CGT) moratorium or reduction for landlords selling to FTBs, and a focus on more affordable housing options.
Burridge emphasized the need for creativity in addressing contemporary challenges rather than repackaging outdated strategies. While cautious about presenting these ideas as definitive answers, he underscored the importance of fostering innovation in tackling the complexities of the property market.