Property Market News

This month, we pick out the key points that affect the housing market from the chancellor's Autumn Statement. There's also been an increase in homeowners slipping into mortgage arrears and rents remain on the rise for new lets,

Read on to find out more.

Autumn Statement - Key housing market points

Chancellor Jeremy Hunt has made his Autumn Statement , and while there were no major surprises, a handful of the announcements will have a direct impact on the property market.

Firstly, the Mortgage Guarantee Scheme has been extended until the end of June 2025. The scheme, which was first introduced in 2021 and was due to end in December 2023, was designed to encourage lenders to offer more 95% loan-to-value mortgages to buyers with a 5% deposit. If a buyer defaults on their mortgage payment, the government steps in to cover some of the shortfall.

Whilst the scheme hasn't been used extensively - with around 5% of first-time buyers using it since it was introduced - it has opened the door for more people to get onto the property ladder, and mortgage rates for buyers with a 5% deposit have dropped slightly in November, to 6.03% on average.

The chancellor used his Autumn Statement to promise investment of more than £110m to build 40,000 new homes over the next year. £32m has also been earmarked to beat a planning backlog and develop new housing in cities such as Cambridge, Leeds, and London.

In some good news for renters, the Local Housing Allowance rate has been increased. The rate, which affects how much help you get when renting from a private landlord, has been frozen since 2020, but the new increase will give 1.6m households an average of £800 support next year.

Mortgage arrears on the rise

The number of property owners falling behind on their mortgage payments rose sharply over the summer months, with UK landlords hit particularly hard.

Figures from UK Finance show that 87,930 homeowners were in arrears between June and September - an 18% increase on the same period in 2022. For landlords, it's even worse, with the number in arrears having doubled in the past 12 months.

Whilst the sharp increase of homeowners in arrears may seem alarming, it still represents just 1% of the UK's 8.8m outstanding mortgages. However, with an estimated 1.6m mortgage deals due to expire next year, the number of homeowners is set to increase further.

Already in 2023, the number of people in arrears jumped 7% in July to September compared with the previous quarter, although a slowdown in rising mortgage rates will hopefully keep mortgage defaults low.

Average rents for new lets continue to rise

The average rent for a new let has increased by more than 10% over the past year. It now stands at £1,166 per month according to property website, Zoopla. This in part has been caused by rising interest rates and cost of living.

But with demand for rental properties currently running at 27% above the 5-year average, many landlords now see multiple applicants per property with competition high. Average annual rents are £14,000, compared to £12,700 a year ago. The increases are much lower for existing renters, who have seen their annual rent increase by 5.7% on average.

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