Ruhul Shamsuddin, the founder of Lordsons Estate Agents, anticipates a challenging rental market in 2024, emphasizing the need to closely monitor politics and consider energy costs before making housing decisions.
With over a decade of experience, Ruhul, also known as the ‘Big Silver One,’ predicts a dynamic landscape.
In a report by Lordsons, a substantial 25% of landlords have expressed intentions to sell a property by August 2024. Rising mortgage rates are a significant factor, squeezing landlords out of the market and minimizing returns on investments.
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Capital gains tax allowance reductions also contribute to this trend. Ruhul notes, “Given that the 2024 market landscape is expected to mirror the preceding year, it is unsurprising that landlords continue to weigh their options.”
Ruhul observes, “The 2024 market landscape mirroring the previous year isn’t surprising, with landlords contemplating options. The capital gains tax allowance reduction in April 2024, from £6,000 to £3,000, poses a potential deterrent.”
In March 2023, the CGT allowance was £12,000, significantly impacting recent selling landlords. Despite challenges, only 3% plan property purchases in 2024.
Regarding rental costs, Ruhul predicts a peak but slower rise in some areas. He notes, “Further escalations are expected in 2024, posing challenges for tenants coping with higher monthly rental costs.”
Estate agents’ data indicates peak average rental prices in August 2023, gradually moderating throughout the year.
The political landscape will significantly influence the rental market in 2024, according to Ruhul. He states, “Given the substantial number of landlords and tenants nationwide, politicians are likely to address rental market issues for votes.
The Conservative Party aims for a ‘better deal for renters’ with proposed reforms. Meanwhile, the Labour Party prioritizes ending Section 21 evictions, hinting at additional measures if victorious, like compulsory licensing and rent controls.”
For those in the market for a home, staying informed about new policies is crucial. The Renter’s Reform bill, introduced in May 2023, aims to prohibit Section 21 evictions, simplify pet ownership requests, and eliminate fixed-term tenancies.
Despite progress through readings and committee stages, Ruhul notes a government reversal, linking Section 21 changes to justice system reforms. The potential for these reforms to become law in 2024 introduces uncertainties, especially with the upcoming general election.
Addressing energy concerns, Ruhul emphasizes the significance of energy efficiency and bills. In September, the Prime Minister abandoned plans to raise the minimum energy efficiency standard, bringing relief to landlords worried about potential home update costs.
Despite this, Ruhul asserts that energy efficiency upgrades remain on the agenda. He states, “The persistent challenge of rising energy bills for both landlords and tenants, coupled with escalating concerns about climate change, makes the issue pertinent.”
Ruhul predicts a rise in tax costs despite the National Insurance tax break for full-time landlords. The combination of frozen income tax thresholds and Section 24 changes will lead to increased HMRC bills in 2024.
On the other hand, he anticipates interest rates stabilizing, acknowledging some stability while emphasizing the nuanced challenges faced by landlords in managing financial obligations.
Selective licensing schemes introduced in 2023 will persist in 2024, with ongoing consultations for new schemes. Ruhul sees this as an increased focus on refining and expanding licensing frameworks, reflecting a proactive approach to housing and community concerns.
He notes that regulations for the short-term lets market are in progress to address issues related to property usage, community impact, and overall functionality.
In a final prediction, Ruhul expects buy-to-let mortgage rates to gradually decrease. He observes that landlords who remortgaged in 2023 faced notably higher monthly repayments, and this trend is likely to persist for those renegotiating deals or expanding property portfolios in 2024.
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