Improving Property Market Will Benefit Landlords

It is expected that about one million people will move house this year, as the property market improves.

The Ernst & Young ITEM Club has used the Treasury’s economic models to calculate the number of housing transactions for this year, which it expects to rise by 7.5%.

Improving Property Market Will Benefit Landlords

Improving Property Market Will Benefit Landlords

It has also noted that due to Chancellor George Osborne’s plans to guarantee £130 billion of mortgages, housing transactions will increase by a further 7.8% next year.

Chief Economic Advisor to the ITEM Club, Peter Spencer, discusses the predictions: “With export markets continuing to disappoint, the Chancellor has focused his firepower on the home front. And the timing couldn’t have been better.

“Real incomes are already starting to recover, mortgages are becoming more readily available, and homes are more affordable, as the house price-to-earnings ratio continues to fall.

“Although it’s not a long-term strategy, stimulating the housing market and the high street will keep GDP growth positive. Unbalanced growth is better than no growth.”

Schemes

The Government’s new Funding for Lending Scheme (FLS) will hopefully lead to more people getting onto/moving up the property ladder, as it will cut the cost of mortgages. The ITEM Club also supports the controversial Help to Buy scheme.

Spencer explains: “We expect [the scheme] to boost the number of housing transactions, particularly at the lower end of the market where the deposit and low equity have been a major constraint. 

“We should start to feel slightly better off this year, which will help loosen the purse strings. Consumer spending added 0.7 percentage points to GDP in 2012 and the Chancellor’s Budget will help ensure the tills continue to ring for some time yet.

“Consumers have been burnt by the experience of the recession and are much more cautious with their finances. Households are likely to continue paying down debt rather than racking up huge credit card bills.”

Where do landlords fit in?

If more people get onto the property ladder, there will be less pressure on the private rental sector.

Additionally, if the property market becomes more stable, landlord insurance policies could become cheaper, as there will be a lower risk of tenants falling into rent arrears.

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