London Property

1:03 / 43:15 Effects of inflation on housing market with Hossein Fateh CloudHQ

Unmet Expectations on Housing, Mortgage Scheme Extension and the Future – 28th Nov Property Bulletin

Blog Post No. 214

Unmet Expectations on Housing, Mortgage Scheme Extension and the Future – 28th Nov Property Bulletin


The recent Autumn Statement 2023, seen by many as a missed opportunity, left the housing sector wanting for more decisive action.

The Mortgage Guarantee Scheme (MGS) extension was a notable point, providing an 18-month prolongation until June 2025. While welcomed, some expected more substantial changes, especially concerning pressing issues such as Inheritance Tax (IHT), support for landlords, and anticipated Stamp Duty (SDLT) reforms, all of which were absent from the statement.

The Mortgage Guarantee Scheme, introduced in 2021, aims to assist first-time borrowers with homeownership, allowing access to mortgages with only a 5% deposit on properties up to £600,000.

The absence of SDLT changes disappointed many, with expectations now pointing towards potential announcements in Spring Budget 2024. The lack of SDLT adjustments is seen as a missed opportunity to encourage property transactions, particularly among older homeowners looking to downsize.

The statement did, however, touch on support for house building and planning approvals, emphasizing measures to facilitate new housing stock development and streamline planning processes. The promise to simplify planning for converting single dwellings into two flats was made, potentially benefiting investors and developers, but further details are awaited.

Chancellor Jeremy Hunt also pledged assistance for families struggling with rising rents, allocating £1.3 billion in the 2024/25 tax year to support 1.6 million households. However, some skeptics question potential conflicts of interest, given Hunt’s involvement as a landlord.

Buy-to-let landlords, on the other hand, did not find the relief they were hoping for, with Mortgage Interest Relief and Section 24 (S24) left untouched. The absence of action on these fronts is viewed as a missed opportunity to address rising rents and limited property availability for tenants.

Looking forward, expectations are set for more substantial announcements in Spring Budget 2024, which might prove crucial for the rental sector and property market at large.

Investing in London’s real estate presents a golden opportunity for investors from the Gulf Cooperation Council (GCC), particularly in the backdrop of ongoing transformation in various regeneration areas. Stuart Leslie, International Sales and Marketing Director at Barratt London, sheds light on the factors contributing to London’s appeal as a robust long-term investment choice.

London’s real estate market has demonstrated resilience and consistent growth, even amid economic challenges such as Brexit, the global financial crisis, and the COVID-19 pandemic. Over the past two decades, real estate prices in London have nearly quadrupled, showcasing the market’s ability to rebound swiftly from economic downturns.

One key area of interest for global investors, especially those from the GCC, is London’s regeneration zones. Properties within a 750-meter radius of these zones tend to yield higher returns, with an average annual growth rate of up to 3.6%. Notable areas like Tooting, Mill Hill, and Hounslow have captured the attention of Middle Eastern investors due to their attractive yields, location, and transport links.

Tooting in Wandsworth, for instance, offers an affordable investment option with a 2% increase in property prices over the past five years. Mill Hill in North London, located centrally between Mill Hill East underground station and the traditional village centre, is another hotspot witnessing rapid transformation and appreciation in house prices.

Wembley Park Gardens, one of London’s successful regeneration areas, has achieved over 50% price growth in the last ten years, making it an appealing choice for investors. These regeneration zones not only promise capital growth but also align with sustainable property investment trends.

London is not just a real estate investment opportunity; it provides a thriving business environment and entrepreneurial spirit. Despite challenges like COVID-19 and Brexit, London saw a 2.5% increase in business start-ups in 2022. The city stands out as the most entrepreneurial region in the UK, offering substantial support through a high concentration of business incubators and accelerators.

Diversity and a world-class education system further contribute to London’s attractiveness. The city hosts two of the top 10 universities globally, making it a preferred destination for students. Investing in properties within catchment areas of top-rated schools becomes a strategic move for GCC investors.

Transport accessibility is also a crucial factor, with London’s development projects strategically chosen for their proximity to the city’s excellent public transport system. London’s resilience and potential for capital growth position it as a lucrative opportunity for GCC investors, emphasizing its status as a golden opportunity in the global real estate market. As Middle Eastern investors explore possibilities in London, they are poised to reap the rewards of a dynamic and ever-evolving market. Investing in London today offers a chance to be part of a success story that spans centuries.

The recent announcement of a planning shake-up in Jeremy Hunt’s Autumn Statement is anticipated to present a substantial opportunity for landlords and developers, potentially yielding significant profits, according to property experts.

Chancellor Hunt disclosed plans to introduce a permitted development right that allows the conversion of a house into two flats without requiring formal permission, as long as the exterior remains unaltered. This proposed regulatory change could prove advantageous for property developers, potentially creating more housing options for first-time buyers and those looking to downsize.

Expected to come into effect after a consultation period, the new rules align with the growing emphasis on sustainable property development. The move towards repurposing and repositioning existing assets within the current physical envelope gains prominence, especially as demolitions face increasing scrutiny due to their environmental impact. This shift in planning regulations is likely to reshape property investment strategies, contributing to the ongoing transformation of the real estate sector.

The proposed permitted development rights (PDR) would provide a faster route for landlords to convert a buy-to-let property into two flats, potentially increasing their income and addressing the demand for rental accommodation in areas facing shortages.

Tenants have faced challenges due to a decrease in the availability of rental properties, leading to rising rents amid a period of high inflation. Advertised rents outside London rose by 10% in the year to September, with a 12% increase in the capital. While the Autumn Statement did not offer significant measures for landlords, the unfreezing of the Local Housing Allowance was welcomed by many in the industry.

In addition to potentially boosting landlords’ income, the proposed PDR could offer a solution to the reduction in available rental properties. Landlords and developers should, however, carefully evaluate the return on investment before committing to property conversions. Considerations include the average rental income, the cost of conversion (estimated between £25,000 to £80,000), and the potential timeframe for completion, which involves architectural design, planning permission, and construction.

The outlook for property investment and development is evolving, driven by a changing regulatory landscape, economic dynamics, and societal shifts. The industry’s response to these changes, including repurposing and sustainable development strategies, is likely to shape the future of real estate in the UK.

At London Property we help you make informed decisions and choose the right strategies for your property challenges. Book a 15 minute call to see how we can help, backed by 30 years of experience and deep rooted relationships with industry leaders.

Changes in working practices, lifestyle, and the broader socio-economic landscape are reshaping the real estate sector, with a notable impact on retail and office spaces.

The rise of online shopping has reduced the demand for physical retail space, leading to increased vacancies in retail units. Similarly, the dynamics of the office market have been influenced by remote and hybrid working trends, along with a growing emphasis on environmental sustainability.

The shift towards remote work and sustainability requirements has resulted in a contraction of office space needs, particularly in lower-grade office buildings. This, coupled with sustainability considerations, is placing pressure on investors to repurpose underperforming assets. However, the traditional approach of demolishing and rebuilding is becoming less feasible due to environmental concerns and challenges in obtaining planning permissions.

In response, there is a growing trend of repurposing existing real estate assets without resorting to demolition. Refurbishment and redevelopment within the existing physical envelope are gaining traction as sustainable alternatives. This shift aligns with the increasing focus on environmentally conscious property investment and development.

Examples of this trend include the conversion of office buildings into life sciences and laboratory spaces, notably in regions like the ‘golden triangle’ of Oxford, Cambridge, and London. The demand for such spaces has risen, driven by the growth in life sciences occupiers, in line with the UK government’s vision to establish the country as a global life sciences hub.

As the real estate landscape continues to evolve, repurposing existing assets is becoming a strategic approach for investors seeking sustainable and environmentally responsible solutions in the face of changing market dynamics.

In the ever-evolving landscape of investment decisions, a notable shift is occurring. Beyond the traditional considerations of risk and return, impact has emerged as a crucial dimension.

This shift is prominently seen in the realm of impact investing, where environmental and social considerations share the spotlight with ESG (Environmental, Social, Governance).

PATRIZIA, a key player, launched its impact investing strategy, PATRIZIA Sustainable Communities, in 2022. We explore their approach with insights from Marleen Bikker-Bekkers, Head of Investments – Europe, and Fund Manager of PATRIZIA Sustainable Communities, and Saskia van den Bronk, Head of Capital Markets Netherlands.

PATRIZIA emphasizes the vital role investors can play in realizing the United Nations Sustainable Development Goals (SDGs), particularly when public capital falls short. The focus is on deploying private capital sustainably to make a meaningful impact. The company identifies four sustainability pillars: social impact, environmental impact, governance impact, and innovation and technology, considering the latter as crucial for enhancing the sustainability of real estate and infrastructure.

For the PATRIZIA Sustainable Communities strategy, three pillars were established, targeting six SDGs. These pillars encompass affordable housing, green real estate, and inclusion and connectivity. With a commitment to measurable impact, the strategy ensures that housing costs do not exceed 35% of household income, focuses on lower-to-middle-income groups, and actively engages in creating social spaces. Financial returns, with a minimum 12% Internal Rate of Return (IRR), are intrinsically tied to achieving impact objectives.

In collaboration with Deloitte, PATRIZIA has developed a framework to define measurable Key Performance Indicators (KPIs) for each impact theme. The criteria include affordability metrics, resident participation in social engagement programs, and more. While acknowledging the challenge of perfect measurability, the company is committed to continuously improving its framework to contribute to a fairer and cleaner world.

PATRIZIA has invested in two affordable and social housing projects in Dublin, constructing nearly 800 apartments. Future projects include social and affordable housing in the UK, care homes for the elderly in Spain and Germany, redevelopment projects in London, and urban regeneration sites in the Benelux. The company adopts a bottom-up approach, aligning financial and impact objectives.

The consensus is that impact investing is here to stay, with increasing realization that progress toward SDGs needs acceleration. Regulatory support and a growing trend of regulators advocating minimum allocations for impact investing contribute to its permanence. Younger pension fund members are also actively engaging in discussions, reflecting a broader shift toward socially responsible investments.

As impact investing solidifies its position, companies like PATRIZIA exemplify the integration of environmental and social considerations into investment strategies. The commitment to measurable impact, combined with financial returns, underscores the transformative potential of impact investing in shaping a sustainable and equitable future.

Ask us anything, we will have a solution.