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Prospects for the UK Property Market

The background for 2016

Growth in house prices for 2015 averaged 6.7%, slightly less than the previous year, whilst average monthly rentals (excluding London) increased by almost 5%. Throughout last year there were expectations for an interest rate rise in the 1st quarter of this year, but the weaker economic outlook and continued global turbulence means that rate rises seem highly unlikely in the near term which is good news for mortgages. It really pays to shop around for the best deal as there is strong competition between lenders. It is expected that house prices will continue to rise as demand outstrips supply and new housing numbers fails to bridge the gap.

First time buyers and landlords

To help first time buyers the government’s Help to Buy Scheme and Help to Buy ISAs announced in December further squeeze the market at the lower end. Although competition from landlords and second home buyers may weaken in April as the 3 surcharge on stamp duty comes in which may deter investors.

For landlords the investment landscape is increasingly challenging with a number of stringent pieces of legislation coming into force, including the Right to Rent Act, and a less favourable taxation situation as mortgage interest tax relief is limited to 20% from 2017. Whilst property letting remains an attractive proposition in a rising house price environment investors will have to ensure they do not fall foul of the regulations and HMRC. With many years’ experience in the lettings business we are always happy to discuss landlords’ particular situations with them.

The outlook for the year

Whilst some commentators are predicting growth in UK wide property prices to slow further, the continued strong demand in and around St Albans for property means that house prices are expected to rise but possibly at a slower rate than some areas in the north of England and Scotland as these places play catch-up. Forecasts from the experts for the whole of 2016 range from 2% up to 7%.

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