Category: Blog Posts

Net zero is a big topic of conversation at the moment and, recently, the government set a target of lifting the minimum energy efficiency standard in to-let, non-domestic buildings to ‘B’, as part of its target for the UK to be net zero by 2050.

Currently, many landlords are relaxed, knowing their Energy Performance Certificate (EPC) sits at an ‘E’ rating, but with this change coming in, many will be left scrambling to ensure their premises fit in with regulation.

It is estimated that 10% of non-domestic let buildings are below the ‘E’ rating, and from 1 April 2023, landlords can only keep buildings lawfully if they are at least an E, subject to exemptions.

The government proposes two ‘compliance windows’, the first being from 2025 to 2027. From 1 April 2025, all non-domestic rented buildings in the scope of the Minimum Energy Efficiency Standards (MEES) regulations would have to have a valid EPC, and if one had expired, a new one would have to be obtained.

From 1 April 2027, the minimum required rating would rise to ‘C’, so landlords must have improved the building by then, or have registered a valid exemption. If the building possessed a ‘C’ rating as of April 2025, the landlord would be compliant with the regulations.

In the second compliance window, from 2028 to 2030, a landlord would have to present a valid EPC by 1 April 2028 and from 1 April 2030, the minimum rating would rise to ‘B’. If the building possessed a ‘B’ rating as of April 2028, the landlord would be in compliance.

Last year, we saw the stamp duty relief ignite the sales market but just how much did the first stamp duty holiday extension to June distort the residential property market? HMRC data shows a 62% drop in sales in July compared with June, the month that the maximum saving of £15,000 ended. Transactions in June were the highest for a single month since records began in 2005. The second highest figure was in March of this year, the date the stamp duty holiday was originally set to end. Unsurprisingly, supply and demand are still re-balancing 2022 begins.

Nationwide recorded UK annual house price growth of 10% in November. Halifax data for the month shows a similar trend, with quarterly growth at a 15 year high. This massive price growth is the result of competitive mortgage rates and tight supply, both of which we expect to reverse over the coming year. This will increase downwards pressure on prices. 

Rents are now rising as rapidly as they were falling at the start of 2021. Rental value growth in prime central London (PCL) and prime outer London (POL) was 5.3% and 5.1% respectively in the three months to November. For PCL it is the highest figure since September 2010, a time when the rental market was shaking off the effects of the global financial crisis. In POL you must go back to March 2004 to find a stronger rate of quarterly growth. 

Corporate demand for rental properties has surged as the economy has gradually reopened. This was exemplified by Shell’s announcement that it would be moving its global HQ to London, this is likely to drive tenant demand in the capital. Corporate demand matched pre-Covid levels in October 2021. Meanwhile, the number of new prospective tenants from all sources was 44% higher in November than the same month in 2019. With early data suggesting that the end of the pandemic is now approaching we do not expect this to change in the near future. 

Lettings supply fell steeply over the course of 2021 as the many short-let properties that came onto the long-let market dried up as staycation rules were relaxed. Furthermore, many would-be landlords sold in 2021 in order to take advantage of the stamp duty holiday. The peak month in 2021 for market valuation appraisals (a leading indicator of supply) was February. The figure in November was down by 46%, underlining to what extent supply has fallen as demand surges, maintaining strong upwards pressure on rents. 

In what is the highest figure since January 2019, 22% of all offers accepted in the UK in November were related to a move into London from outside the capital. The vast majority of buyers are looking for a bolthole in the capital, rather than to up sticks from elsewhere in the country, but predictions of cities’ demise due to the pandemic appear to have been wide of the mark with many offices calling employees back and many employees preferring to work from the office.

As we move into a new year, it seems that people will continue to work from home at least 1-2 days a week as many employers adopt a hybrid working model. We expect that this will influence what tenants will be looking for and foresee the “work from home factor” to continue to be important with many tenants placing high importance on having outdoor space or communal facilities. As we edge further back to normality, we predict that rents will increase pre COVID levels. From a sales perspective, we expect to see a rise in house prices in both London and Manchester with a respective increase of 2.3% and 4.4% predicted vs 2020/2021 values.

Over the summer we saw extreme weather conditions which led to numerous instances of flash flooding across London. Unfortunately, some of Vesper Groups landlords were impacted and we found that this was not isolated to properties located close to the river but that the drainage systems overflowed and caused severe damage to many lower ground floor properties. In addition to this we saw many instances of older properties having issues with leaking roofs as a result of heavy rainfall. We handled the repairs and insurance claims for many of our landlords whose properties were impacted. These claims ranged from £2,000 to £11,000. After witnessing the detrimental impact that the adverse weather conditions can have on a property, I would urge you to check that you have adequate landlords/buildings insurance that covers flooding. Insurance starts at only £37 per month (example via British Gas Landlord Insurance) and could save you thousands if your property was to be impacted.

Vesper welcomes our new Associate Manager, Chantelle to the team as we wish Holly a fond farewell.

We sadly say goodbye to our Associate Manager, Holly, after four years. Holly has been the backbone of Vesper’s operations ensuring that all our landlord’s rents are transferred in a timely manner and tenancies are progressed as efficiently as possible. She will be moving overseas and her last day will be on the 2nd of July therefore if you do have any outstanding queries, please ensure you drop her an email before she departs. We thank Holly for her great contribution to the Vesper team over the past four years and wish her luck in her future endeavours. 

Chantelle joins us from some of London’s most well-known estate agencies. She has gained a wealth of experience in the property sector, and we look forward to her bringing a fresh perspective to Vesper Group. 

Singapore Office

We are pleased to announce that our Singapore office continues to go from strength to strength and has tripled in size over the past few months.  Vesper Homes (Singapore) now consists of several property agents and business development associates. The Singaporean office primarily deals with local transactions for sales and rentals in Singapore. However, please feel free to contact our team about investment opportunities in the UK and in APAC. 

21 of London’s 33 boroughs are currently in the midst of a property boom and have hit record house prices over the past year. Typically, we are seeing that the boroughs in the outer suburbs are experiencing the largest growth in prices. Much of this can be attributed to the pandemic with many Londoners not expecting to return to the office on a full-time basis and opting to relocate to the outer leafy suburbs.

Prices in areas such as Haringey, Merton and Waltham Forest are at an all-time high. Furthermore, the regeneration of east London over the past decade has also fuelled the steep rise in property prices on that side of the city.

Contrary to this, we have also seen certain boroughs where property is cheaper now than in the 2018 peak. The largest Covid-provoked drop is in Kensington and Chelsea where prices are £120,600 lower than they were in 2018 when prices in the area were at a record high.

Price decreases in Westminster have also been significant at £116,800 down compared to 2018. Prices in Camden, Hammersmith and Fulham and Tower Hamlets have also tumbled below their recent peaks, completing the top five areas by discount.