According to a report from Rightmove, average house prices in Great Britain have hit a historical high of £350,000 this month.

The month has seen a 1.7% increase in prices when compared to February, with the average asking price hitting £354,564, a huge increase of £5760 in monetary terms. These figures represent the biggest increase in a month for the time of year, seen for eighteen years, and signifies an annual growth of 10.4% in UK house prices.

Except for London and Scotland, all regions showed an annual growth rate of over 10%.

Experts agree that the driving force behind this marked increase in average prices is largely due to the demand-versus-supply issues in the UK right now. It is thought that demand is double that of the supply of homes available for sale, causing a serious housing shortage and driving fierce competition and price hikes.

Sellers are finding that the chances of finding a serious buyer in as little as a week are higher than ever, with figures indicating that they are twice as likely to sell in this time frame now as they would have been back in 2019.

Rightmove’s director of property data, Tim Bannister, commented: “Many of those who are selling in this record-breaking market obviously also face the prospect of buying again in the same market and being in fierce competition against other buyers.”

“Having a buyer for your own property, subject to contract, puts those who are buying again in a powerful position compared to buyers who have yet to sell, and agents report that these ‘power buyers’ are more likely to get the property that they want and negotiate the best deal on price.”

The research, compiled by Rightmove, is the latest indicator that, in the two years since the onset of the COVID pandemic, the property market has remained strong and resilient despite the state of the economy and the end of the stamp duty holiday.

A knock-on effect of the pandemic was the increased demand for larger properties due to an escalating number of workers either forced to work from home or, following the end of the lockdowns, choosing to continue to do so. Being forced to stay home meant many people’s priorities changed when looking at what type of property they were looking to buy.

The result of this demand for larger homes was an increase of 3.4% in seller asking prices for properties with four or more bedrooms. This went a long way in encouraging homeowners to place their properties for sale on the market, with a 12% rise in the number of sellers on the market when compared with the same period last year.

Head of regional agency at Strutt & Parker, Kate Eales, stated: “The trend of a significant number of people planning to work from home for three days a week or more in the longer term has created new hotspots across the country for part-time commuters, including Shropshire, the North Cotswolds, and Suffolk.”

Over the course of the past 12 months, the average market value of a home in the UK increased by just under 11%. This was the fastest rate of growth recorded in 15 years, taking average UK house prices to a new record high of £278,123 in February.

Data published by Halifax, suggests that on average, UK homeowners saw an extra £27,215 added to the value of their properties between February 2021 and February 2022. According to the Office for National Statistics, the average annual salary during the same period of time was £25,971.

This suggests that UK homeowners made more from their homes during this time than from their jobs, a trend many experts predict will continue indefinitely.

“This was an eighth successive month of house price growth, as the resilience that has typified the market throughout the pandemic shows little sign of easing. Lack of supply continues to underpin rising house prices, with recent industry surveys showing a dearth of new properties being listed, now a long-term trend,” said Halifax managing director Russell Galley.

“This may be a particular issue at the larger end of the property market. In the past year, the average price of detached properties has risen at a rate more than four times that of flats in cash terms.”

“Looking ahead, as COVID moves into an endemic phase and almost all domestic restrictions are removed, geopolitical events expose the UK to new sources of uncertainty.”

A good time to own your own home

Increasingly, prospective first-time buyers are finding themselves being priced out of the UK property market in its entirety. On a more positive note, those who already own their own homes are making an unprecedented windfall.

“There’s arguably never been a better time to be a homeowner as, despite all that’s been thrown at it, the UK property market continues to go from strength to strength,” said Marc von Grundherr, director of Benham and Reeves.

“This performance really is quite alarming when you consider the wider economic turmoil that we’ve faced for some years now, and it proves that there really is no safer investment than bricks and mortar.”

“Even across London, where market conditions have remained far more muted, values have continued to climb, and the capital’s property market is now poised to enjoy an accelerated rate of growth over the coming year.”

Attention turns back to the capital

While London recorded the slowest average property price growth over the period (5.4%), this is still the region’s best performance in almost two years.

“If 2021 was defined by a race for space and people moving out to the suburbs, 2022 is seeing… house hunters rushing back into the capital,” commented Guy Gittins, chief executive of agents Chestertons.

Meanwhile, Nationwide highlighted the potential complications on the horizon attributed to the escalating conflict in Ukraine.

“The continued buoyancy of the housing market is little surprising, given the mounting pressure on household budgets from rising inflation, which reached a 30-year high of 5.5% in January, and since borrowing costs have started to move up from all-time lows in recent months,” commented Nationwide.

“The squeeze on household incomes is set to intensify, with inflation expected to rise above 7% in the coming months,”

“Indeed, there is scope for inflation to rise even further as events in Ukraine threaten to send global energy prices even higher.”

“Assuming that labour market conditions remain strong, the Bank of England is also likely to raise interest rates, which will exert a further drag on the market if this feeds through to mortgage rates.”

Whether you are planning to put your home up for sale or you are simply looking to improve it for your benefit, getting the best return on your investment is always a priority.

But which residential renovations add the most value to a home, over and above the costs of the project? If you are looking to maximise your home’s market value, which renovations should you be setting your sights on?

A word on property type and location

Before getting started, it is worth noting how the ROI on any given renovation may be different from one part of the country to the next. For example, data from the Federation of Master Builders (FMB) indicates that while adding an en-suite bathroom to a bedroom in London could add around £15,000 to the property’s value, the same project in the northeast of England would contribute £2,000.

Before performing any major refurbishments, consult with a reputable local construction firm for their advice and recommendations.

Loft and garage conversions

One of the most popular (and profitable) ways to add value to a home is to convert a garage or loft into a fully functional living space. Research suggests that while a quality loft conversion can add as much as 15% to a property’s value, a garage conversion can contribute as much as 20%.

While both projects are fairly extensive in nature, they can also be surprisingly affordable. A simple loft conversion can be conducted for around £10,000 and up, whereas a garage can be converted for as little as £5,000.

Energy efficiency improvements

Homebuyers are placing greater emphasis on energy efficiency than ever before. As a result, energy-efficient home improvements can add significant value and appeal to any type of property. Smaller projects like adding cavity wall insulation and higher-quality loft insulation can be covered with no more than around £1,000. Fitting an energy-efficient boiler coupled with a smart thermostat could add a price closer to £3,000, while the installation of high-efficiency double glazing could cost £5,000 or more.

Either way, research from the UK government suggests that energy-efficient home improvements can contribute anything from 15% to 35% extra to a home’s value. Irrespective of the costs of the renovations, the ROI could be huge.

External improvements and landscaping

First impressions are everything when looking to get the best possible price for a property. Oftentimes, prospective buyers have made their decision long before setting foot through the door. An attractive exterior is so important that some studies suggest a well-kept garden can add up to 20% to the value of a residential property.

Landscaped gardens with private recreation spaces and plenty of decorative plants can be particularly profitable when selling a home. The installation of good garden lighting can also make a major difference, particularly when presenting your home to prospective buyers at night. Importantly, a garden that looks relatively straightforward to keep well-maintained is essential. A garden that will be a full-time job to tend to is never particularly attractive.

Kitchen and bathroom upgrades

Kitchens and bathrooms tend to be scrutinised particularly heavily by prospective homebuyers. A complete kitchen renovation can generate a generous ROI, but so too can replacing things like worktops, cabinet doors, and appliances. If it is an option, creating an open-plan living and dining space by removing an internal wall is worth considering. Some estimates suggest that while the project may cost around £5,000, it has the potential to add up to £50,000 to a home’s market value. Installing an en-suite bathroom also guarantees a decent ROI, typically up to a maximum of a 5% property value increase.

A new report has identified that around 85,000 new rental homes are needed every year in the capital in order to reach government housing targets.

The report, which was commissioned by the NRLA (National Residential Landlords Association) and created by Capital Economics, an economics consultancy firm, identifies the serious shortage of properties available in the London rental market.

This supply deficit is based on the government’s set target of the number of homes that need to be built to meet the rental demand in London. Currently, in order to reach levels of demand, that target is set at 340,000 homes per year to be built across the UK by 2025.

The Capital Economics report shows that if social rental properties and residences occupied by the owner continue to grow at an average rate over the next decade, then the private rental market will require an additional 227,000 properties annually to reach government targets.

This increase in property supply is also vital to meet the levels of the expected number of new households across the UK, which are currently predicted to be around 1.8 million. The capital alone would need an extra 83,000 new properties available for rent over the coming 10 years.

Government data shows that the supply of available private rental accommodation in London has fallen by 85,000 over the last five years. This shortage in supply is particularly challenging for the younger generation, either leaving home for the first time or needing accommodation for educational purposes. With this figure expected to increase by 12% (120,000) in the years up to 2030, finding accommodation for the 15–24-year-old age group may be problematic.

Research consultancy BVA BDRC provided additional data that suggests that in central London, in the last quarter of 2021, almost three-quarters of landlords saw a marked increase in the demand for rental homes. This figure indicates an increase of 54% from the previous report for Q3 2021.

The report from Capital Economics suggests that in order to meet the supply targets, the Treasury needs to find ways to encourage investment in the rental housing sector and sets out a number of ways in which they can do this.

The report advises an increase in the number of new home builds and encourages investors and developers to make use of unused commercial property by converting it into residential homes. It also pointed out that it would be beneficial for short-term leases to be turned into long-term lets, as well as ensuring that empty properties are upgraded to a standard where they are habitable and can be put back onto the rental market.

The chief executive of the NRLA, Ben Beadle, explains: “As the demand for private rental properties picks up following the pandemic, renters across the capital will struggle to find the homes they need and want. For all the efforts to support homeownership, the private rented sector has a vital role to play in housing so many Londoners.”

“The analysis demonstrates the folly of the mayor’s calls for rent controls in the capital, a policy that would serve only to freeze investment in the very homes renters need.

Many landlords across the UK are opting to create limited liability companies to manage their buy-to-let property portfolios. Although this is becoming more and more popular, there are some considerations that need to be taken into account before taking that step.

According to data provided by Hamptons, there were in total 41,700 new limited companies formed for this purpose, a leap of 23% since 2019. This trend looks set to continue, but is it the best choice for BTL landlords, and what are the considerations that need to be looked at?

Tax relief

When operating through a limited company, landlords are able to claim mortgage interest relief and are subject to a lower income tax rate due to the fact that they will be paying corporation tax as opposed to paying income tax on any profits made.

Private landlords are restricted when it comes to mortgage interest relief, which for them is limited to the basic rate of income tax, meaning all earnings from rental will be subject to taxation.

Typically, due to high mortgage interest rates, the advantages of setting up a limited company for BTL properties tend to be more beneficial to those in a higher income bracket or landlords with large property portfolios. It’s always vital to speak to an expert tax advisor before making a decision.

Interest rate increase

Over the last few years, we have seen low-interest rates, which has resulted in finance costs being kept to a minimum. However, with the recent interest rate increases from the Bank of England and the rising cost of inflation, we can expect to see rising interest rates on the property market too.

The impact on landlords will be significant due to the expected rise in interest rates once their fixed interest rate period comes to an end.

Property market trends

Post-pandemic lifestyles for many UK citizens have seen significant changes in the way people live and work. Priorities in what buyers are looking for have shifted, with many continuing to work from home on a full-time or part-time basis. There has been a marked increase in people moving out of big cities and opting to buy homes in towns and villages, making it important for landlords to do the relevant research and ensure that they are investing in the right areas.

Limited liability

Limited liability protects landlords’ personal finances and assets, meaning that landlord liability is restricted to the value of their financial investment in the company.

This liability can be further protected by taking out personal liability and personal indemnity insurance.

Reporting and record-keeping requirements

As a limited company, you are required to maintain up-to-date financial records, which must be filed at the end of each financial year. Company accounts and an annual tax return must be sent to Companies House together with the landlord’s usual annual self-assessment. A disadvantage of this is that it will almost certainly result in increased accounting costs.

Preparing for the future

It is important for landlords to know what their future plans are with regard to their rental properties. If they intend to pass on property ownership to a family member, then it is better to form a limited company, as it makes the process simpler and more tax-efficient.

Choosing the right mortgage product

Typically, mortgage rates for limited companies tend to be higher than those taken out by individual buyers. Despite this, there are specialist lenders that provide competitive-rate mortgages, which are best accessed through a whole-of-market broker.

It is important to note that the criteria for a limited company mortgage require the business to be set up in one of the following ways:

A trading company is usually a business already in existence that is planning to increase its assets by investing in buy-to-let property.

Special Payment Vehicle: a company set up for the express purpose of purchasing and managing buy-to-let properties.

Taking all the above into account will help landlords make the important decision of whether it is more or less advantageous to set up a limited liability company to manage buy-to-let properties. Employing the services of a tax expert and an experienced property broker will significantly increase the chances of making the right decision.

Property Mark has stated that new incentives should be offered to property developers to encourage them to invest in vacant housing. Across the UK, there are thousands of empty properties, which could effectively help ease the ever-growing housing shortage.

The trade body, which represents property professionals such as estate agents, letting agents, and auctioneers, has called on the government to re-instate the ‘Empty Homes Programme’, which ended in 2015 after having distributed £100 million.

Property Mark has also asked the government to consider the removal of VAT on home improvements, including home efficiency upgrades. They are also requesting that they look at offering discounts or exemptions on stamp duty and council tax for developers buying empty homes.

The trade body welcomed the government’s recently released Levelling Up White Paper, created to address this issue, but implored ministers to go a step further and “explore a scheme that targets owners of empty homes”. The recommendations are not entirely unlike the previous White Paper, which was created with the intention of giving local councils the power to enforce rules on owners to ensure that their properties are not left vacant long-term and for them to find suitable tenants.

How many vacant properties are there?

The number of empty homes is 20% higher than it was at the end of the previous national Empty Homes Programme. According to Action on Empty Homes, there are currently 238,306 empty properties in England, which is a figure not too far from the government target to build 300,000 new homes per year in an attempt to keep up with the ever-increasing demand for housing.

The government has missed its target by quite some distance, with only 228,370 new homes being completed in the year ending September 2021. The increasing demand for housing and the historically high lack of supply are serious problems for the property market.

“Empty homes are a wasted resource, and at a time when the housing market is in the grip of unsustainably low levels of stock for sale and for rent, it makes no sense that there are thousands of homes sitting vacant,” Timothy Douglas, head of policy and campaigns for Property mark, commented.

“We have long called for the reintroduction of a national programme of funding because of the much-needed incentive that it can provide to get these properties back into the market for would-be home buyers or landlords.”

He added: “The UK government has set itself a target of building 300,000 new houses a year, but it must not miss opportunities to do more to better manage the growing level of existing housing stock that is currently being underused, or not used at all.”

This week, from February 28th to March 6th, is National Empty Homes Week, which is an initiative to help councils identify and bring empty homes back onto the property market for rental or sale. With more than 260,000 properties in England sitting empty for at least 6 months, it is vital that councils address these issues to help increase supply.

As an example, the city of Salford has, at this time, 2,392 properties that have been empty for at least six months. The Salford Council has been actively working in conjunction with property developers and investors on a mission to bring these properties up to scratch and find tenants.

“Salford is in the midst of a housing crisis, and we take the issue of empty properties extremely seriously as we know that there are so many families and residents in our city that could make them a home of their own,” Deputy City Mayor Councillor Tracy Kelly, Lead Member for Housing, Property, and Regeneration, said.

She added: “Our dedicated team deploys a wide range of tactics to bring these homes back into use, and we have strong partnerships with local housing associations who help us refurbish them and find new tenants who are in need of a good-quality home.”

She continued: “We offer landlords a number of options to find a solution for an empty home, and we will not hesitate to use enforcement powers, such as serving improvement notices, to ensure the home is habitable. I would urge landlords to work promptly with our teams to ensure that properties can be ready for use as soon as possible.”

Salford Council is offering grants to landlords and investors in a scheme they have called the Private Sector Leasing Scheme, which provides assistance with the refurbishment and upgrade of properties to a liveable standard. The scheme requires a 30% contribution from the applicant and must be managed for a minimum of 5 years with affordable rental rates.

Specialist brokers across the UK have reported a major spike in mortgage interest among ex-pats over recent months, credited largely with the loosening of COVID-19 restrictions and the reopening of the country’s borders.

Expat Mortgages UK managing director, Daniel Yorke, said that while there had been a “gradual increase over the past 12 months”, the last three months in particular saw a more rapid increase in activity.

Analysts are now predicting even faster growth in the near future, with particularly heavy emphasis on the growing popularity of BTL investments among overseas investors.

Speaking on behalf of Knowledge Bank, operations director Matthew Corker noted a major uptick in the number of ex-pats looking to purchase private rental properties in the UK.

“While the growth has been steady in residential searches, there has been a significant increase in ex-pats looking for BTL properties. Partially driving this interest is the volatility in the stock market, coupled with UK house prices exceeding all growth expectations,” he said.

“Lenders are also reacting to this trend, and there have been more and more products added for expat borrowers. With house prices and rents looking set to keep increasing, we anticipate this growth to continue in 2022.”

Specifically, Mr Corker stated that while standard expat residential searches were up by around 7% year-on-year, searches for buy-to-let properties increased by around 16% during the same period.

Anthony Rose, co-chief executive of LDN Finance, likewise noted a significant increase in the number of ex-pats demonstrating an interest in BTL mortgages.

“Most of our enquiries have been expats returning to the UK looking to buy, or they’re refinancing their existing UK properties,” he said.

“However, we have also noticed that the end of the stamp duty holiday and strong property market post-Covid have played a vital role in clients obtaining expat mortgages for BTL properties.”

Mr. Rose went on to highlight the potential challenges being faced by such borrowers, for whom product availability is limited at best.

“It’s a small, niche space that can involve placing square peg clients in round holes. Often, expats have bespoke circumstances that require providers to have a flexible approach to lending,” he said.

“A classic example is the intended date of return home; some lenders require a specific date, whereas others need some ballpark timelines. Naturally, these times can change, so it’s difficult for clients to pinpoint them precisely. Lenders need to be mindful of this.”

Chris Sykes, associate director and mortgage consultant at Private Finance, suggested that growing interest among overseas investors could breathe new life into London’s fairly lacklustre property market.

“We do now see this as an area that we expect to grow post-pandemic, especially as London returns to life, and with prices having stagnated in the capital, this could be an attractive time for expat buyers and, importantly, investors,” he said.

He went on to say that it “remains to be seen” whether market activity will soon return to pre-COVID norms but indicated that the release of a “great deal of pent-up demand” following two years of stagnation could be on the horizon.

If you own your home, there is little more disconcerting than the appearance of a large crack in one of your walls. Some cracks are purely cosmetic and have no cause for concern, but others could be an early indication of subsidence.

The question is: what can you do if you spot the signs of subsidence or believe your home may be at risk?

How can I spot the warning signs of subsidence?

Local mining activity and issues with soil are the two main causes of subsidence. One of the earliest and most common indications of subsidence is the appearance of diagonal cracks in walls, which are wider at the top than at the bottom.

Windows and doors that start sticking for no apparent reason can be indicative of subsidence, as can wallpaper that begins tearing with no obvious cause. In all instances, a survey should be conducted at an early stage by a qualified professional.

Precautionary steps can and should be taken by homeowners to reduce subsidence risk. Examples of this include periodically checking guttering and water pipes for leaks, pruning trees and shrubs to prevent the soil from drying out, and laying porous materials (like grass or gravel) around the property.

However, subsidence caused by local mining activity or major soil issues cannot usually be prevented with these basic precautionary measures. Homeowners in areas where subsidence risk is elevated must therefore check their buildings’ insurance in order to ensure they have the appropriate level of coverage.

If you believe you have spotted an early indicator of subsidence, call your insurer immediately. They will tell you what to do next, which will usually include hiring a contractor to examine your property and determine the cause of the issue.

Most issues with subsidence are fairly minor in nature, resulting in equally rudimentary damage that can be repaired right away. But there is also the possibility that the subsidence detected could be ongoing, which will call for a more comprehensive long-term solution. The foundations of the property, for example, may need to be repaired and strengthened to prevent any further damage.

Does home insurance cover subsidence?

Whether you are covered against subsidence will be determined by your policy’s terms, inclusions, and exclusions. A good home insurance policy will cover most types of structural damage caused by subsidence.

Cover may also be provided for temporary accommodation costs if it becomes necessary to leave your home temporarily during the repairs.

Ensuring you are covered against subsidence is advisable, given the potentially high costs of funding the repairs out of your own pocket. A typical subsidence repair can easily cost tens of thousands of pounds, depending on the nature of the damage.

What if I want to sell my home?

You are legally obliged to inform prospective buyers of any issues with subsidence affecting your home, rather than attempting to hide them.

This need not be an issue in all instances, as a study carried out by LV found that 43% of prospective buyers would still go ahead with a purchase after being told of issues with subsidence. In addition, 7% said subsidence does not concern them at all when looking to purchase a property.

Either way, it is in your best interests (and those who take an interest in your home) to ensure the necessary repairs are conducted fully and professionally ahead of time. Not just for peace of mind, but to make sure you get the best possible market price for your home.