The Guild of Property Professionals is calling on the new chancellor, Rishi Sunak, to use his Budget speech, which will take place tomorrow, to support investment in the private rented sector, as research shows that buy-to-let landlords are exiting the market in droves.
Tax and regulation changes continue to have a negative impact on the buy-to-let market, with a significant number of landlords selling buy-to-let properties with a view reducing their portfolio, or exiting the market altogether.
Mortgage interest relief changes, the scrapping of the ‘wear and tear’ allowance and the introduction of the 3% stamp duty surcharge have hit landlords’ profits over the past few of years, which partly explains why so many people are exiting the BTL market and thus reducing the supply of much needed private rented stock.
The government’s draconian tax changes have not just pushed a number of BTL landlords out of the PRS, but also left many prospective tenants with little alternative but to bid against each other, pushing rents up in the process, as a result of falling housing supply.
Iain McKenzie, CEO of the Guild of Property Professionals, said: “If we wish to sustain a thriving private rented sector there must be no further taxation on landlords. Tenants want more choice not less.
“The government should do more to support landlords to remain in the sector, not drive them out, which will ultimately cut the supply of rental properties and put upward pressure on rents.”
The housing market has had a strong start to the year, with improved activity levels and property price growth across every region in the UK, and McKenzie hopes that this trend will continue for the foreseeable future.
He continued: “Ideally, the housing market needs 12 months of a stable environment to enable it to bear the fruit of pent up frustration. It would be pertinent for the government to avoid anything that could hamper consumer confidence, which is already at risk with the threat of tough measures to prevent the spread of Coronavirus.
“It is likely there will be further support for first-time buyers by way of discount through a ‘First Home’ scheme, which could see new homes discounted by up to 30%. Whilst it is fair to say that first-time buyers are the lifeblood of the property market, getting the balance right between new buyer incentives and support for second-hand house buyers is the key to a fluid market.
“With that in mind, like many, we would welcome any positive news on Stamp Duty. Boris Johnson had previously pledged to implement changes to current stamp duty legislation by raising the threshold to £500,000. Although mentions of this have been more subdued in recent months, it would relieve large sections of the country from the burden of stamp duty and go a long way to bolstering consumer confidence.”
Rightmove’s growth rate is at an all-time low, despite what some consider to be an unbeatable lead amongst portals in the UK.
That’s the view of Mike DelPrete, former head of strategy at a New Zealand portal and a long-standing analyst of estate agencies in the UK and the US.
In a new analysis he says the primary driver for Rightmove – accounting for 72 per cent of its revenue – is its core agency listing service. “The growth rate of this business has dipped to four per cent, less than half of last year, and the lowest rate in years” says DelPrete.
He continues: “Rightmove has saturated the UK market. Every estate agent that could possibly be a customer, generally is. Therefore, the only way to increase revenues in the agency listing business is by raising prices.”
However, the analyst warns that Rightmove’s ability to raise prices is diminishing, and the key performance indicator for portals – average revenue per advertiser growth or ARPA – is falling annually.
DelPrete, an expert in US portals and agents as well as those in the UK, says the American site Zillow underwent a similar slowdown in its core lead generation business.
The analyst says the logical next move for such a business is to find new revenue streams, and in Zillow’s case it launched an iBuyer operation, home loans and other initiatives. “In the face of growth headwinds, Zillow acted decisively to diversify.”
However, he insists Rightmove has not done this – perhaps because it is in such a dominant position with a huge profit margin of 74 per cent on revenues and may be beyond the reach of other portals in the UK.
“But as a public company, it naturally faces pressure to grow — and that growth has steadily slowed over a number of years” says DelPrete.
Prominent agency industry analyst Anthony Codling is asking agents whether the board of OnTheMarket did the right thing by firing Ian Springett.
Codling – a prominent analyst formerly at investment bank Jefferies – has issued a 10 question survey asking agents questions including whether they believe OTM was correct in yesterday’s sacking, and whether the portal is staying true to its aims of becoming an alternative to Rightmove and Zoopla.
It goes on to ask specifically where Springett’s replacement should come from – whether it should be from within the existing team at OTM, from the wider agency sector, from another existing property portal, or from an agency industry supplier, or from outside the residential sector completely.
In addition to some general questions about Rightmove and the wider portal landscape, Codling concludes by asking: “If you could make one change to the strategy of OnTheMarket, what would it be?”
At Jefferies, Codling became a prominent industry figure for his searing analyses of Purplebricks’ sales record, and then in 2018 Codling quit the bank and became chief executive of property search firm Rummage4Property.
In December 2018 he was quoted by the Financial Times as saying that Countrywide and some 30 other estate agency groups signed up to Rummage, alongside some of the UK’s largest housebuilders. He suggested that Rummage would offer a listing service for just over a tenth of the cost of Rightmove.
Specifically, he said Rummage4Property would begin by charging a flat fee of £1200 a month and would link any changes to house price inflation. “The key selling point is that it is much cheaper than Rightmove, Zoopla and OnTheMarket plc” he told the paper.
However, Rummage4Property has not moved in the direction suggested by Codling, and he himself left the company towards the end of 2019. He has since been linked with an organisation called twindig.