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Our Review of the Property Market in 2019

By Maurice Shasha  //  Mon 23rd December 2019
As 2019 draws to a close, we look back on some of the biggest stories from London’s Property Market this year...
The Biggest London Property News Stories of 2019
With Brexit, the second election in two years, a Tory leadership contest - and the start of a Labour one - 2019 was a busy year with a divided country and plenty going on politically.

Continued uncertainty over Brexit made its presence felt in the property market, with buyers and seller biding their time and an average 1.6% fall in London house prices over the year to October.

The festive election saw a decisive win by the Conservatives, giving Mr Johnson his mandate to ‘get Brexit done’. And according to commentators, this new-found stability is already having an impact on the housing market as we approach 2020.

To find out what exactly was happening in the property world during 2019, read our review of the year, month by month.


Record numbers of first-time buyers enter the property market

First-time buyers with mortgages have entered the property market in record numbers according to figures from Yorkshire Building Society.

Cheaper loans, the government’s Help to Buy scheme and stamp duty relief, have all led to 367,038 first-time buyers entered the market during 2018 compared to 362,800 the year before.

The lender claims that first-time buyers purchasing homes with a mortgage now represent half of the property market, the highest proportion in 23 years. It also says that first-time buyer activity, funded by home loans, is at its highest level since 2006.

Yorkshire Building Society bases its claims on analysis of official UK Finance figures along with its own internal data, which suggest that the number of first-time buyer mortgages approved annually has doubled over the past 10 years.

For the building society, the figures indicate that the first-time buyer sector is now more significant to the housing market than home movers or buy-to-let investors.

It believes the rise in first-time buyer activity has been fuelled by more 95% loan to value mortgages, heated competition for business among lenders, stamp duty relief and the impact of the government’s Help to Buy scheme.

To read our full commentary – please click here

Could 10-year fixed rate mortgages be the future

With ongoing uncertainty over Brexit, and increases in the Bank of England base rate, one trend for 2019 could be the growth in fixed-rate mortgages that last as long as a decade.

Competitively priced five-year fixed deals became increasingly popular in 2018. However, the past year has seen a growing number of institutions offering the longer, 10-year fixed rates, which were previously only available from a minority of lenders.

Currently 14 providers, including the Halifax, Lloyds Bank and Yorkshire Building Society, have come on board increasing competition in the market and meaning better rates can be found, says a report on the Which? website.

According to Which? “Greater competition usually means better rates, and that’s largely been the case in the 10-year market – with rates at most loan-to-value (LTV) levels slightly cheaper than a year ago. Indeed, at the popular LTVs of 75% and 80%, the cheapest introductory rates dropped marginally in 2018, despite an increase in the Bank of England’s base rate.”

However, this benefit doesn’t extend to people with small deposits; fixed rate 10-year deals at 95% LTV are hard to find.

To read our full commentary – please click here


Tenant Fees bill becomes law

The Tenant Fees bill has been given Royal Assent, meaning the new act will come into force on 1 June 2019

The act prevents landlords and letting agents from charging their tenants administrative and credit check fees. It also caps security deposits at the equivalent of five weeks’ rent and holding deposits, to secure a property, at one week’s rent.

An exception is properties where the rent is more than £50,000 a year. Here, deposits will be capped at six weeks’ rent. Fees for making changes to a tenancy agreement have also been capped at £50.

Default fees, which are written into a contract to recover costs due to the actions of a tenant, have not been banned, but their use has been restricted. Such fees can now only be charged to cover the cost of a new key, where the original has been lost, and where rent is more than 14 days late.

The government has pledged to publish guidance on the act for tenants, landlords and letting agents later this spring.

According to the government, the aim of the act is to make renting more affordable for tenants while improving transparency and competition in the lettings market.

To read our full commentary – please click here


Research shows rise of limited company landlord

Two-thirds of landlords, with more than four properties, plan to use limited company status for future investments, new research has revealed. In addition, 17% of landlords, with smaller portfolios, of three properties or fewer, are also looking to buy in this way.

The research, by specialist lender Precise Mortgages, follows a change to mortgage interest tax relief rules, which has been gradually introduced since 2017.

By April 2020, landlords will be unable to deduct mortgage expenses from rental income to reduce their tax bill. Instead, landlords will be given a new tax credit, which is less generous than the previous regime.

The change does not affect limited company landlords, who are able to continue offsetting mortgage interest against profits.

Limited companies also pay corporation tax on profits of 19% instead of income tax, which, if charged at the higher rate, can be as much as 45%. Corporation tax is set to be reduced further, to 17% for the 2020/21 tax year.

To read our full commentary – please click here


English Housing Survey reveals high satisfaction with rented homes

Most private sector tenants are satisfied with their accommodation, according to a major government survey. The English Housing Survey 2017/18 found that 84% of tenants in the sector are either satisfied or very satisfied with their rental homes.

The English Housing Survey is an annual profile of people’s housing circumstances. It looks at the condition of private sector housing as well as costs, affordability and energy efficiency. Launched in 1967, it is the longest running government study of its kind.

According to the report, 4.5 million households live in England’s private rented sector, which equates to 19% of all households. This compares to the 64% (14.8 million) who own their homes and 17% who live in social housing.

On average, the survey found that private renters spent 33% of their income on rent. This figure was higher for renters in London (42%). In comparison, owner occupiers spent an average of 17% of their household income on mortgages. However, the vast majority of private tenants (71%) said they found it easy or very easy to pay their rent.

The study also revealed that most people (72%), who had ended tenancies after less than three years, did so because they wanted to move. The reasons for moving were job related (18%), moving to a better neighbourhood (16%) and moving to a larger home (13%).

To read our full commentary – please click here

Creative buyers seek unconventional properties

Converted barns, boats and even tree houses are on the list of the UK public’s dream homes, according to a new survey, which found that more than half of property owners would consider a move to a less conventional property.

The survey, from BLP Insurance, revealed that people see a radical house move as a chance to escape the pressures of modern life and express their creativity.

But the desire for a less traditional property was stronger among young people than those close to retirement, with 61% of those aged 35 to 54 welcoming the idea, compared to 42% of the over 55s.

“The days when most homeowners aspire to buy a semi-detached house in a quiet tree lined suburban street could soon be a thing of the past,” said Phil Harris, director at BLP Insurance.

“It seems that people approaching their 40s and 50s are looking for a greater level of freedom and adventure and want to try a different type of home.”

To read our full commentary – please click here


Buyers warned of restrictive covenants

Homebuyers are being warned of archaic clauses in the title deeds to properties, which could prove expensive further down the line.

Restrictive covenants, prohibiting certain uses and alterations are frequently found in title deeds for UK properties. In new properties, they tend to be about preserving the character and amenities in a development. While rarer in older properties, covenants, which do exist could date back many years.

Conveyancers will usually flag up any major issues during the house purchase, but occasionally they don’t. Homeowners who breach a covenant, or unwittingly buy from someone who has, could be liable for large sums.

The Guardian reports on the cases of several buyers who have received demands because of restrictive covenants. In one case, the homeowners were billed for £45,000 because of a claim that a developer had breached a covenant by building their home and failing to seek the correct permissions.

To read our full commentary – please click here


Propertymark launches a manifesto for housing

As the political parties set out their stalls ahead of the general election on 12 December, Propertymark has produced a manifesto of its own. The umbrella organisation for the sector’s professional bodies is calling on the parties to make housing reform part of their plans for a new government.

The manifesto contains a list of asks, namely to:

Reform stamp duty

Propertymark is calling on the government to remove the 3% stamp duty levy on second homes and buy-to-lets, which, it believes, has restricted the supply of property for rent.

Incentivise downsizing

The manifesto wants to see more homes aimed at the over 65s along with bonds for downsizers, in an effort to free up family homes. It also wants people downsizing to be exempt from stamp duty altogether.

Make the RoPA recommendations law

Propertymark wants a future government to act on the recommendations made by the regulation of property agents (RoPA) working group, chaired by Lord Best. They include a code of practice, licensing and qualifications aimed at increasing the professional status of the sector.

Open up the database on rogue operators

Tenants, agents and regulators should be given access to a database of rogue landlords and agents. There should also be action to prevent rogue operators moving from lettings into sales.

To read our full commentary – please click here

Labour drops tenant ‘right to buy’ plans ahead of election

Labour has dropped a controversial policy, which would have given long-term tenants the ‘right to buy’ their rental homes at discounted prices.

The aim of the policy was to redress problems some tenants experience, such as landlords refusing to invest in properties.

It is believed the party had a change of heart because of fears that the policy would be unworkable; a change which was welcomed by the National Landlords Association (NLA).

Chris Norris, from the NLA, said: “To suggest that private landlords should be selling their properties to their tenants at a below market rate arbitrarily set by politicians is ludicrous. Landlords had to pay market rates themselves. It’s only right that, if and when they decide to sell it, they can do so at market rates.

“If Labour does indeed wish to fix the housing crisis, they should focus on encouraging the government to build more social housing, which is what the housing sector is lacking.”

To read our full commentary – please click here

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