PUBLISHED: 25/11/22

Soft landing or a crash?

After a few lockdowns and a prolonged period of economic and political uncertainty, it seems that we have already stepped into a different era where Brexit and COVID are no longer making front page news. The increase of consumer goods, and inflationary effects in general, has hit hard without showing any mercy to the real estate sector. The rise in property prices which was initially perhaps a result of low demand due to COVID-19 or the stamp duty holiday now goes hand in hand with the increase in build costs and rental prices.

Several Landlords have publicly raised their concerns. They warned that rent caps will not only jeopardize their development plans and their capacity to deliver much-needed affordable homes but also affect their ability to maintain the existing stock. A few housing associations, including some of the G10, have already announced that they will cut their development plans significantly in the sight of the government’s proposals. In addition, the rent income reductions will force the Housing Associations to look for a way to compensate for the losses. The most direct saving will be the cuts in repairs and maintenance costs which are already 14% up this year. Furthermore, most of the negative impacts will affect housing on a long-term basis, implying even more risk to an already volatile market.