Landlords considering purchasing property insurance on new properties as they take advantage of the demand for rented housing will not have been disappointed with the latest house price report released by the UK’s largest lender this morning.
Slight increase masks overall trend
The Halifax which is now part of Lloyds banking group announced that house prices showed an infinitesimal rise of 0.1% in May compared to April but more in depth figures suggest that purchasing new property is still getting cheaper. Analysis of the figures shows that the average price of a home in the UK today is £160,000, which is over 4% lower than this time last year, and in effect a landlord is saving well over £6,000 on the purchase of an average property. The year on year drop is actually the biggest fall since October 2009 which may well set alarm bells ringing in some quarters of the industry. The three monthly figures also showed a drop but only by 1.2%.
Steady year ahead
The forecasters at the Halifax don’t believe that house prices will move much at all in the present year, saying that the continued low interest rates will prove attractive to those who can find a deposit but inflation, higher taxes and uncertainty in the job market will act as a deterrent to many who are thinking of taking the plunge into house ownership.
Once more this is good news for the prospective landlord. Lenders appear to be turning away from the traditional target of first time buyers trying to get onto the property ladder and instead are focusing on property investors with a little more money to deposit and a professional outlook on their investment. The £6,000 drop of the average property price will enable landlords to pay for such essentials as business property insurance, health and safety checks, energy efficiency ratings and upgrading of the new purchase without compromising their borrowing. It will also help cover the initial void period between purchase and the placement of the new tenant. The overall picture suggests tenants will still be in plentiful supply while forecasts of modest increases in interest rates over the next 12 months should give a landlord time to settle his finances and plan for the future.