Get ready for an intriguing year ahead in 2024, particularly if you're a hands-on landlord, as several forthcoming announcements are poised to reshape the landscape of property management.

As well as the potential progression of the Renters (Reform)Bill through Parliament, we can anticipate a pivotal budget release in Marchand the likelihood of a General Election at some point during the year. As the Conservatives persist in their efforts to reform the private rented sector, landlords should remain vigilant about potential shifts on the horizon in the event of Labour assuming power in 2024.

Mortgage Rates

Current indications suggest a gradual decline in inflation, with the base rate having peaked at 5.25% in August and maintaining this level since. Capital Economics (CE) projects a dip in inflation to 2.4% by the close of 2024 and a further descent to 1.3% by the end of 2025. Consequently, CE envisions a base rate decrease to 4.75% next year, notably below the 5.1-5.2%projections made by others, before reaching 3% in 2025.

Should these forecasts materialise, there's a potential for average mortgage rates to decrease, which bodes well for existing landlords seeking to remortgage, fostering an environment conducive to much-needed new investments.

Tax

While some landlords may benefit from the elimination of Class 2 National Insurance and the reduction of Class 4 contributions from 9%to 8% in April, a freeze on Income Tax bands and the Personal Allowance implies that landlords who have raised rents beyond their increased costs might find themselves taxed on a higher portion of their income.

For those contemplating property sales in 2024, the tax-free allowance for Capital Gains is set to halve again in April, dwindling from£6,000 to £3,000. Although this may not pose a significant burden, it could entail an additional cost of up to £600 for 20% taxpayers and up to £1,350 for higher-rate taxpayers. This, however, is unlikely to dent the profits accumulated over the years.

What's on the cards for property sales?

While the market is likely to favour buyers, especially in the initial months of the year, a traditional uptick in activity is anticipated during the spring. However, the contents of the Chancellor's Spring Budget remain uncertain, introducing an element of unpredictability that could impact both confidence and transactions.

The prospect of a General Election later in the year could potentially lead to a slowdown in the sales market. In that case, those who are able to buy could benefit from there being much less competition for the properties that are out there.

Are rents poised to ascend or descend?

The outlook for the rental market appears promising. Most forecasts suggest sustained rent growth, albeit at a slightly moderated pace compared to recent years, aligning with the stabilisation of both inflation and wage growth.

Having outpaced inflation in 2023, average UK rents are predicted to grow by 5%-6% in 2024, and the cumulative outlook over the next five years anticipates growth of around 20%. If inflation settles around the 2%mark from 2025, landlords stand to benefit from robust rental profit potential.
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How might the business of lettings change?

The most significant changes are encapsulated in the Conservative's Renters (Reform) Bill and Labour's Renters' Charter. Although there are disparities between the two proposals, a potential shift in power during the General Election could potentially influence the fate of the Renters(Reform) Bill. Notably, both parties advocate for the abolition of Section 21,with Labour's Angela Raynor expressing a firm commitment to an immediate ban on no-fault evictions if elected.

In reality, the complete abolition of Section 21 by 2024seems unlikely, despite Labour's assertive pledge. The Conservatives have indicated their reluctance to proceed until the court system undergoes reform.

Material information

The sole definitive change anticipated in 2024 pertains to the 'material information' required in property listings for both sales and lettings.

Part A of the guidance, effective since May 2022, mandates the inclusion of price/rent, council tax, and tenure details in all property listings. Subsequently, Parts B and C, published in November 2023, stipulate additional information about property type, construction, rooms, utilities, parking, and disclosure of pertinent issues affecting the property.

If you enlist an agent for marketing your rental property, ensure you provide them with the necessary information to comply with the guidance. If you handle property advertising independently, refer to NTSELAT's guide to guarantee the accuracy of your listing.

For any enquiries about the lettings landscape for 2024, our team of lettings experts is readily available to assist.

Locate your local Leaders branch here.

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