London's Housing Boom, Millionaire Exodus, and Rental Market Shake-Up: Key Trends and Insights

London is brimming with capital waiting to be invested in housing, facing a millionaire exodus, and undergoing significant changes in the rental market. Key insights cover Melanie Leech's vision for unlocking capital, Labour's private school tax raid, non-traditional PCL areas, voluntary rent increases, and mortgage rate cuts.

Melanie Leech, Chief Executive of the British Property Federation (BPF), envisions a new housing boom in London, akin to past transformative periods. Since the 1980s, London's population has grown by almost half, yet housing supply has lagged, contributing to high rents and declining home ownership. The BPF’s manifesto, "Building our Future," calls for critical changes to the planning system, aiming to provide homes for diverse demographics and budgets.

To expedite development, more planners are needed. Political parties are committing to providing more resources, and BPF members are willing to pay higher planning fees for faster, more effective systems. With significant capital available, smart investment can unlock more build-to-rent (BtR) properties, housing for older people, student housing, and social housing. BtR properties offer long-term leases, predictable rental increases, and well-maintained facilities, providing greater security and quality for tenants.

With the right policies, the BPF predicts that BtR output could double to 30,000 homes annually across the UK. Investing in purpose-built student accommodation (PBSA) is essential, enhancing the student experience and alleviating pressure on the wider rental market. Private sector capital is increasingly invested in social housing, with partnerships between not-for-profit and for-profit sectors emerging to boost supply. The BPF’s manifesto offers the next government an opportunity to unlock investment, power London’s economy, and maintain its global status.

For property investors, non-traditional prime central London (PCL) areas like Camden, Notting Hill, Shoreditch, and South Bank are becoming attractive. These areas have experienced significant urban regeneration, boosting desirability and property availability. Young, affluent buyers are drawn to these neighborhoods for their cultural, culinary, and entertainment options, alongside potential for strong investment returns.

Notting Hill, with its colorful houses and famous market, has seen property values increase by 101% over the past decade. Shoreditch has undergone major transformation, with significant price rises and a growing number of high-value properties. Camden and Kentish Town have seen substantial rental price growth, making them attractive for investors seeking higher returns.

Labour’s plans to address the rental market include preventing landlords from creating bidding wars, though renters can still "voluntarily" offer higher prices. Inspired by New Zealand’s policies, Labour aims to ensure advertised rental prices match final charges, limiting competitive bidding. Critics argue this creates a loophole, as competitive bidding environments persist due to supply shortages.

Labour also proposes limiting the amount of rent tenants can pay upfront. Scotland’s government has implemented rent rise limits and eviction moratoriums, offering a model for tenant protection. With Labour leading in polls, their plans could significantly impact the rental market.

In mortgage news, NatWest has reduced fixed-rate mortgage costs ahead of a potential Bank of England rate cut in August. The bank’s five-year fixed rates for remortgage now start from 4.26% with a £1,495 f

Maximize your property wealth with London Property. Turn challenges into opportunities. With expert knowledge and reach, we tackle the complexities and inefficiencies of the property market with you.

Transcript

Unknown Speaker  0:00  
prophecy bulletin by London property the home of super prime.

Speaker 1  0:05  
London is brimming with capital waiting to be invested in housing, and Melanie leads for the British Property Federation BPF has an idea to unlock it. In her vision London needs another housing boom much like the transformative ones of the past. The late 19th century gave us the Victorian terraces in zones two and three. The 1930s saw the Metro land developments build much of the outer suburbs and the postwar council house boom, replaced older homes and filled in bomb sites across the city. Now today's housing crisis demands a burst of building on a similar scale. Since the 1980s, London's population has grown by almost half, the number of homes has only risen by a third. The supply gap has contributed to historically high rents and made homeownership in London and minority tenure 48% and falling compared to 65% nationally. to bridge this gap, the BPS manifesto, building our future calls for critical changes to the planning system to ensure it delivers new homes and the essential infrastructure that supports them, especially in London where the need is greatest. To unlock development at pace, more planners are needed. major political parties are committing to providing more resources, and BPF members have consistently expressed their willingness to pay higher planning fees for a system that delivers faster and more effectively. The goal is to provide homes for people of all ages families of all sizes and cater to a wide range of budgets. The good news is that there is a vast amount of capital available for investment in New London homes. If we're smart about accessing it, we can unlock more build to rent BTR properties, housing for older people, student housing and affordable and social housing. Addressing Londoners diverse needs. BTR properties have emerged as a vital component of London's housing supply, with almost 50,000 new homes completed. Unlike the traditional buy to let market buy to rent developments are built at scale, specifically designed for renting and typically managed as a blog by professional companies. rents and Bter are broadly similar to the wider private rented sector that with long term leases and predictable rental increases, tenants can enjoy greater security and easier financial planning. BTR offers numerous other advantages, including well maintained facilities, communal spaces, and on site services such as 24 hour security and concierge services. professional management ensures consistent quality and maintenance. With the right policy and planning framework, the BPF predicts that we can double annual biter rent output to 30,000 homes across the UK, boosting choice and quality for Londoners investing in purpose built student accommodation. pbsa is also essential in a city with so many globally renowned higher education institutions. High quality accommodation is an increasingly important part of the offer to students and postgraduates and enhances the overall student experience. Offering safe, comfortable and conducive environments for studying and living pbsa can help alleviate the pressure on the wider rental market, freeing up homes for others to live in. One of the most significant developments in recent years has been the growth of private sector capital invested in our pensions and savings seeking to invest in social housing. This boosts supply either directly through development activity or indirectly through the acquisition of existing assets. Partnerships between the not for profit and the for profit sectors are emerging with a shared ambition to deliver quality sustainable investment in this sector. With the right framework billions of pounds more of new money could be unlocked for social housing. The BPF manifesto sets out the property industry is offered to the next government to unlock investment into our built environment to build the homes critical logistics, infrastructure, workspaces and leisure destinations that London and the country needs. The BPS members want to play their part in the city's fourth grade housing boom. Further, they are offering the new government an opportunity to work with them to unlock new investment, power London's economy, build new homes and maintain London's preeminent status on the world stage. For buyers and investors, both domestic and international, non traditional areas of prime central London contain a wealth of opportunities. London is renowned globally as a destination for property investors. A third of high net worth individuals from the Gulf Cooperation Council region invested in London property last year, according to Orion bank, more than any other major global market. Typically high net worth individuals gravitate towards the heartland of the prime central London market when seeking a property investment, encompassing barriers such as the City of London, Kensington and Chelsea and the city of Westminster. This is hardly a surprise. These areas are known for their luxurious buildings, historical significance green spaces, great schools and cultural vibrancy. But our understanding of the prime property market is shifting and brokers working with high net worth individuals will need to take note of buyers evolving preferences. There are areas of central London outside what we typically considered to be prime central London that are increasingly experiencing high demand from investors and wealthy buyers, including Camden, Notting Hill, Shoreditch and Southbank. It's worth considering what is driving demand in these neighbourhoods and what the implications may be for lenders and brokers. Notable urban regeneration projects have taken place in these London enclaves over recent years. This has boosted their desirability and increase the number of properties available, while each has maintained its unique character and charm. Consequently, we've seen a generational shift as young affluent buyers opt for these less traditionally desirable areas of the city. Those who have spent time in these parts of London will appreciate why the cultural, culinary and entertainment options are growing significantly. Brokers representing High Net Worth buyers must take note, understanding that their clients may will explore less traditional hotspots around the Capitol. Meanwhile, with a mix of historical post industrial and contemporary architecture, there's a wide variety of property in which a new generation can invest. Finally, from an investment point of view, these areas are still located in central London, which means they enjoy many of the same benefits that the traditional postcodes of the prime market do indeed own to their location, prestige, quality and demand among domestic and international buyers. They have similar potential for capital growth and resilience. for homebuyers and investors both domestic and international. These non traditional prime central London areas contain a wealth of opportunities with data showing that they have outperformed the rest of the UK in recent years. Notting Hill is one of London's most desirable areas with colourful houses a famous market and celebrity residents. Its property values have experienced a huge increase of 101% in the past 10 years, according to data from Kinley, folkard and Hayward, rising by 11% in 2023. Alone, this at a time when average UK prices have been in decline. Shoreditch has enjoyed arguably the most significant transformation in the past decade, one in 10 properties exchanges for over 1 million pounds, while overall average prices have risen from 1.0 7 million pounds in 2013 to 1.3 8 million in 2023. Similar trends can be seen in the rental market in Camden and Kentish town. JLL reports that between 2011 and 2021. rental prices for flats rose by 19%. With house rental prices rising by 9%. The firm also forecasts a 25% sales price growth and a 17.6% rental growth between 2022 and 2026. So the prospect of higher rental returns could provide more opportunities for investors. Clearly these less traditional areas are gaining popularity and value thanks to their location, amenities and character. They offer a different lifestyle from that of the traditional PCL areas, appealing to a typically younger demographic while still carrying the potential to deliver strong investment returns. Are these areas challenging prime central London postcodes, or do we need to define prime central London? I don't think so. The distinct singular features of luxury properties and prime central London postcodes restrict direct comparisons. The likes of houses in Kensington and Chelsea have been sought after for centuries long representing the top echelon of the property market, not just in the UK but globally. This enduring appeal of the PCL Heartland is not being challenged by up and coming barriers such as Notting Hill or Shoreditch, but brokers representing High Net Worth buyers must take note. Nonetheless, understanding that their clients may will explore less traditional hotspots around the capital.

Speaker 1  7:58  
Labour's plans for the rental market are loosely modelled on policies adopted in New Zealand and 2021. Labour plans to allow renters to bid voluntarily above the asking price on properties and move experts warn could undermine efforts to prevent bidding wars that drive up rental prices. So Kier Starmer vowed to introduce a law to prevent landlords from getting prospective tenants to bid against each other for rental homes. We've got to stop the bidding wars because what happens is the landlord effectively goes to two or three different sets of renters driving the rent up and up and up. We won't allow them to do that. He said during a visit to a housing site in New York, where streeting shadow health secretary said labour would compel landlords to clearly advertise rental prices, ensuring that the advertised price matches the final charged amount. However, a senior labour official stated the differential chose to bid above the advertised price to secure a property, then that's a voluntary thing and would be allowed. The official clarified the idea is that the agency can't facilitate the bidding war to drive up the price on behalf of the landlord. Labour's plans are inspired by policies in New Zealand, which banned landlords from encouraging tenants to bid above the asking price, but allow renters to offer higher prices voluntarily if not pressured or advised to do so. Critics argue this creates a loophole. In New Zealand average rental prices have risen faster since the policy was implemented. Lucien cook head of residential research at samples noted such as the shortfall of stock in the UK private sector, you're always going to have a competitive bidding environment. Whether or not it is encouraged or invited strikes me as being sort of not the point. Labour did not respond to a request for comment. The party has made affordable renting one of its election promises vowing to overhaul regulation on the private rental sector in its manifesto. Labour holds a commanding 20 point lead ahead of the conservatives, which could enable it to form a government in the upcoming election. The UK is red hot rental market coupled with a dwindling supply of properties and rising mortgage costs has led to soaring prices across the UK. There are roughly 5.5 million private rental homes in the UK, with more than a third of these households spending half their take home pay on and evictions due to rent arrears which record highs nearly 2023. According to Generation Rent, activists have long called for rent controls to limit rental price increases, their labour has been resistant. Labour also proposes to limit the amount of rent tenants can be asked to pay up front to secure a property. Scotland's devolved government has imposed legislation limiting annual rent rises, and implemented a moratorium on evictions to protect tenants. NatWest has reduced the cost of fixed rate mortgage deals by up to naught point one seven percentage points ahead of the Bank of England bank rate announcement rights Joe Thornhill, other lenders may follow NatWest and lowering their mortgage rates in the coming weeks, despite the Bank of England holding the influential bank rate at 5.25% day. The expectation is that the rate will be cut by the Bank of England at its next meeting on first of August, likely by naught point two five percentage points bringing it to 5% NatWest has agreed to acquire the retail banking arm of Sainsbury's bank, Sainsbury's will pay NatWest 125 million pounds for taking it off its hands. NatWest will gain around 1 million Sainsbury's bank customer accounts as part of the deal, which is expected to be finalised next year. NatWest has cut selected rates for residential purchase and remortgage available direct and through brokers including first time buyer Shared Equity and helped by deals. The bank's five year fixed rates for re mortgage now start from 4.26%. This is for an online mortgage deal which must be applied for and managed solely online. It has a 1495 pound fee, and borrowers must have at least 40% equity in their property 60% loan to value its equivalent to your online only deal starts from 4.82%. Standard five year fixed rates for home purchase start from 4.4% with a 995 pound fee 60% loan to value or from 4.83% over two years. Online and green mortgage deals for homes with energy performance certificate rating agency start from 4.35% for five years, or 4.78% for two years. Virgin Money is making some changes to select fixed rate mortgage deals available through brokers effective from 8pm on the 20th of June. It is slightly increasing the rate and its five year fee free purchase deal for borrowers with a 25% Cash Deposit 75% loan to value from 4.66% to 4.67%. In contrast, the bank's five year fee free fixed rates for a purchase at higher loan to value are being cut. For buyers with a 10% Cash Deposit 90% LTV, the rate is cut from 5.09% to 5%. And for borrowers with a 5% deposit 95% LTV the same deal this year's rate shaved down from 5.4% to 5.35%. virgins buy to let mortgage dealers are getting a more significant red card of up to naught point three one percentage points on selected rates. Standard by to let five year rates with a 995 pound fee will start from 4.78%. Suffered Building Society has cut a number of its buy to let mortgage deals by up to naught point three percentage points, including rates for expat buy to let and holiday homes for UK nationals living overseas but wanting a property in the UK. Among the mutual lenders reduced price deals as a two year standard buy to let deal at 80% loan to value at 5.69%. There is a 199 pound application fee and a 999 pound product fee on the deal. The number of millionaires leaving Britain is expected to double this year amid Labour's tax rate on non dorms and private schools. A record 9500 People with assets excluding property of $1 million or more are forecast to leave the country in 2024. According to expat wealth manager Henley and partners last year at 4200 millionaires left. This comes as labour revealed plans to strengthen the Conservatives non DOM reforms in his manifesto last week, both parties have committed to making the non DOM regimes less generous, but labour went further, pledging to raise 450 million pounds by closing a loophole that allows non Dom's to avoid paying inheritance tax on assets held in trust. advisor to non Dom's have warned that many wealthy foreigners will exit the country if they're forced to pay the 40% inheritance tax charge. Britain's inheritance tax rate is one of the highest in the OECD group of leading economies, Henley and partners and your private wealth migration report. Based on data on more than 150,000 high net worth individuals found that the number of millionaires in the UK has dropped by 8% over the past decade. In contrast, other countries have seen increases. France's millionaire population grew by 14% and Australia has soared by 35%. This year's report predicts the UK will lose the second most millionaires of any country overtaken only by China, which is expected to lose 15,200 wealthy residents. Hannah white of the Institute for government said economic and political turmoil in the UK had already triggered an outflow of millionaires, which is now being accelerated by hostile policy decisions ahead of the election. For those educating their children in the UK as well regarded private school sector Labour's commitment to remove their exemption from 20% Vat is a further unwelcome development she added around the world 128,000 millionaires are expected to relocate in 2024. More than in any previous year, Indian partners said the firm noted that China would suffer the biggest outflows which would be more damaging than usual to its economy due to the recent slowdown. Meanwhile, countries with low taxes and golden visas are expected to gain 1000s of millionaires this year. The United Arab Emirates tops the list attracting 6700 from countries such as India, the Middle East, Russia and the UK. The US is predicted to draw in 3800 high net worth individuals and Singapore anticipates inflows of 3500. Dominic Volek of Henley and partners said as the world grapples with a perfect storm of geopolitical tensions, economic uncertainty and social upheaval, millionaires are voting with their feet and record numbers. A report published last year by Swiss bank UBS indicated that Britain felt a sixth place in the global ranking of millionaires, the 2.5 million people holding assets of 1 million pounds or more, compared to 2.8 million in France. 6.2 million in China and 22 point 7 million in the US. subscribe

Speaker 2  16:05  
to our newsletter to receive our weekly bulletins and stay ahead of what's shaping the super prime property market.

Transcribed by https://otter.ai