2022 prediction UK property

All change: predictions for the UK property market in 2022

Nothing is predictable in the current climate, it seems, but there are definitely some forecasts for the UK property sector that seem a safe bet for the year ahead. 

Over the past 12 months, despite many gloomy outlooks at the start of the year, the country’s housing market has remained remarkably resilient. While UK property sales were buoyed by the stamp duty holiday, appetite for the sector remains strong regardless. For homeowners and property investors alike, bricks and mortar has remained one of the most appealing places to invest compared to other avenues.

As the year draws to a close, Kevin Shaw and Michael Cook of property services firm Leaders Romans Group (LRG), have come up with their own set of likely outcomes for 2022. From the rental market to the housing market’s links to economic performance, the pair’s overall outlook is one of optimism.

UK property will continue to climb

The group believes house prices across the UK will continue to grow in 2022, with around a 3% rise over the year. This will be matched, they say, by rental growth that should also hit 3% on average. However, in some of the top-performing areas, rental growth could even reach as high as 5-10%.

Some of this could be caused by a growing gap between demand and stock available. Some landlords in the private rented sector may have already sold, or be planning to sell, to benefit from the house price rise.

As always, across the UK property market, location makes a big difference, and certain areas are forecast to thrive more than others.

Top locations for housing sector growth

According to Kevin Shaw and Michael Cook, the north-west, East Anglia and Essex could be the ones to watch next year. These locations all offer “more bang for your buck”, meaning they will respond well in a climate where people are looking for more space post-lockdown.

They add: “Likewise, investors purchasing in the Midlands and north are benefiting from preferable mortgage deals with better loan to value ratios, improving yield and monthly cash returns on investment. It’s because of this (despite historically strong equity growth in the south), buy-to-let activity has been more prominent in the northern towns in 2021 and we expect this to continue in 2022.”

Build-to-rent boom will continue

The country’s rental market remains a vital part of the UK property sector. More than ever, though, people are looking at renting as a long-term option, and are seeking places that offer a bit more than a standard buy-to-let.

The pair from LRG think the build-to-rent boom will diversify in 2022 to encompass single-family or individual housing as well. At present, build-to-rent is often aimed at multifamily apartments with some shared facilities.

LRG adds: “This is set to expand next year with real estate heavy hitters, such as Lloyd’s and John Lewis & Partners, diversifying some of their portfolios from commercial property into build-to-rent residential property, sending a signal to landlords that there is strength in the sector. But the market needs a far larger supply of units in the build cycle to keep up with demand and this is a strong time to invest in build-to-rent.”

Renters’ Reform Bill could come in

The Renters’ Reform Bill, which was first put forward in 2019 and includes proposals to ban ‘no fault’ Section 21 evictions, could come into effect in the near future. The white paper is currently scheduled for publication in 2022. The Bill could also see the introduction of lifetime deposits for tenants.

It is advisable that landlords make themselves familiar with this Bill, and start to prepare for it. It could seek to make the rental market “safer and less susceptible to unscrupulous landlords”, say Kevin Shaw and Michael Cook.

Section 21 evictions, where a landlord can ask a tenant to leave with “no reason”, have been controversial for years, and the ruling could spark a big change in the sector.

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