The end of the year is not only a time for reflection, but for looking forward to what comes next. So, what do the coming 12 months have in store for us?
While there isn’t a crystal ball we can rely on, there are certain developments ahead that provide some reasons to be cheerful about prospects for investors.
Broader permitted development rules
One of the highlights of the Autumn Statement, from a property perspective, was the announcement of a broadening of the permitted development rights. This would allow property owners to convert a single house into two flats, without having to go through the ordeal of the planning process.
Removing that red tape, which is so often a cause of frustration for developers and investors, has the potential to make a real impact on the housing market.
Making it easier to convert houses in this way could mean a tangible boost to the supply of flats, offering a tremendous opportunity for investors able to pinpoint suitable locations for such conversions.
Elsewhere in the speech, the Chancellor confirmed more money is to be pushed into the planning system itself, in a bid to clear backlogs and speed up the experience for everyone involved. These delays have long been a concern for developers, and any steps which mean the process moves more swiftly have to be welcomed.
Ultimately, both broadening permitted development and investing in the planning process should mean investors are better placed to carry out important improvements to properties which need a little love, making them better suited to the needs of buyers and tenants alike.
Moving forward
These measures are sure to be welcomed by investors who recognise that the year ahead presents an opportunity.
It’s certainly true that the last 12 months or so have featured a host of challenges for those looking to put their money into bricks and mortar, whether they intend to refurb a property and sell it on or hold onto it over a long-term period.
But the fundamentals of the property market are such that it remains a compelling asset, particularly when investors are able to purchase property in the right areas.
The fact that property prices have softened over the last year further highlights the potential; Rightmove research found that vendors are accepting average discounts of around £15,000 off the asking price. Securing a significant discount upfront may open the door to greater profits down the line.
What’s more, funding costs are becoming more competitive, making prospective projects even more attractive.
The window of opportunity
Another factor to bear in mind here is the fact that 2024 is almost certain to be a General Election year. Opinion is split on when the government is likely to go to the polls, with predictions ranging from the Spring all the way on to holding until the very last minute with an election at the start of 2025.
What is beyond question is that the potential of a change in government will mean some uncertainty ahead for investors, and may mean that once a date for the vote is confirmed some will want to put any prospective projects on hold.
In effect, we may be looking at what is effectively a 10-month year in terms of activity, emphasising the need to be decisive and able to act quickly.
The question of trust
Given this situation, it’s crucial brokers recognise the lenders best placed to support their clients in the year ahead. We know that all too often advisers and their clients have had their fingers burnt by funders who could not live up to their word, unable to deliver the financing at a price and speed required by the client.
That’s why it’s so important to work with reputable lenders, those with a track record of meeting expectations. At Tuscan we know that a significant amount of the business we receive is precisely because of that level of trust, the fact brokers know we can deliver the promised funding on time and at a competitive price.
There will be opportunities ahead in 2024; by working with the right partners, brokers and borrowers can capitalise on them more effectively.
Stephen Palfreeman is associate director at Tuscan Capital