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A Time Of Change In The UK Property Market?

Updated: Oct 13, 2022

Kwasi Kwarting.  Source: BBC
UK Chancellor Kwasi Kwarting. Source: BBC

On 30 September 2022, the UK Pound dropped to its lowest level against the U.S. dollar since 1985. This followed new PM, Liz Truss and the new UK chancellor, Quasi Kwarting’s announcement of a radical tax cutting growth strategy for the UK

(A low tax strategy that the Conservative government have reluctantly since taken a slight U-turn on in response to the subsequent panic in the markets and heavy criticism from the IMF)

The Bank of England, responsible for setting the UK interest rates (interest rates are not controlled by the devolved Governments of the UK), promptly agreed a 0.5 point base rate rise to 2.25%, the highest rate in the UK for 14 years following historically low interest rates that were put into place to stimulate growth following the 2008 financial crisis. As a result, many lenders immediately pulled their fixed rate deals until a point where there can be more certainty of how high rates might climb. Most lenders that have since returned to the market have set fixed rates at above the lofty 6% level. Time will tell if the market anxiety will ease and lenders will relax rates slightly. There is little to suggest this will be the case, however.

Many strategists agree the Bank of England interest rate could climb to between 5-6% by the end of 2024, should inflation not be brought under control. That could see lenders Buy-To -Let (BTL) fixed rates as high as 8% if we assume BTL rates at 1-2 points above Bank of England base rate

interest rates
Source: Bank of England Database Oct 2022

So where does this leave investors? Should investors lie low and wait for lending to become affordable again? Or, as inevitably there will be a knee-jerk shift from a sellers market towards a buyers market, is there a now a huge opportunity on the horizon to secure property for below valuation?

The answer his most likely a case of choosing one’s timing, and crucially, access to funds.

Edinburgh as a safer investment

Ranked no1 in the 2022 Colliers list for 'UK residential investment opportunities', and best city for business outside London in 2022, Edinburgh has muscled itself ahead of Oxford and Cambridge to become the UK’s frontrunner as a location for investment. With notable recent expansions of the digital, science and tech sectors, the city boasts a historically low unemployment rate and a high standard of living compared to the UK average. Add to this a world famous tourism industry which accounts for over £3 billion per annum into the local economy. Over 55,000 students (12% of the city’s population) reside in the city across 3 main universities, drawn by the city's elite education institutions, vibrant entertainment and arts culture and Edinburgh's renowned world heritage status.

So, unlike the UK’s traditionally industrialised cities which suffered years of low or zero growth subsequent to the 2008 financial crisis, Edinburgh is arguably much more sheltered from the inevitable rises in unemployment and hardship that traditionally follow in periods of recession or low growth.

As an example the following graph shows the decline in new build development in the 10 years subsequent to the 2007/2008 crisis. Note the heavy drop off in Glasgow.

Source: Registers of Scotland 10 year report
Source: Registers of Scotland 10 year report

Similarly the following data shows the increase/decrease in property values in the 10 years following 2007/8. Note that Midlothian encompasses Edinburgh and surrounding regions whilst East Renfrewshire, North/east Ayrshire, West Dumbartonshire and Inverclyde form Greater Glasgow and surrounding area.

Source: Registers of Scotland 10 year report  2
Source: Registers of Scotland 10 year report

What now for the rental sector?

The lack of affordability and expensive lending costs mean an even more increased pressure on the rental sector, which is already creaking under the pressure of lack of stock. The SNP (Scotland’s devolved Government) have reacted to this by placing a temporary restriction on rent rises and evictions until spring 2023 while the government attempts to get a grip on inflation.

But the trend towards a rental society is a certainty - there’s a desperate need for more rental stock and rents will keep on rising.

Rent increases in Edinburgh (source: Citylets)
Rent increases in Edinburgh (source: Citylets)

‘Cash is king’, and many well known property investors made their fortunes at times exactly like these. Regrettably many who took on lending at high loan to values (LTV’s up to 95% with the Government's help to buy scheme for first time buyers) will now default on their mortgages. Repossession figures will rise and sellers expectations will have to lower.

In 2008/2009, following the financial crisis, UK prices dropped by around 15% (Source Land Registry Data) as lending criteria tightened dramatically, to a not dissimilar market reaction as we are experiencing right now. The immediate time may well not be the time to borrow, but if able, it could very well be the right time to spend.

If you are looking to take advantage of the changing market please email our founder/director, David Whitmey at and we will setup a call to discus your criteria and tailor the search to your exact requirements.

We prefer to work closely with clients on their search rather than with blanket email mailing lists - getting the right location is imperative in a struggling market and ambiguous property "deal" mailing lists are not often what they seem - and we are confident in working on a no up-front fee, no commitment basis.

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