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Property market trends to look out for in 2022

Industry Insight January 25th, 2022
Property market trends to look out for in 2022

Keeping up to date with the latest market trends is essential for any successful business. With the rental reform white paper being released this year and an industry emphasis on sustainability, Arthur is here to help you remain informed.

 

Build-to-Rent growth

Build-to-Rent is currently the most sought after and highly invested-in sector of the property market. Investments and buildings have been on the rise since 2017, and the sector is predicted to have record investments in 2022, exceeding those of 2021. 

According to the CBRE real estate group, “a record £4.1 billion was invested in the UK’s Build to Rent sector in 2021, including investment of £2.1 billion during the last quarter of the year.” Due to the investments, the Build To Rent sector has grown from 22,831 properties (recorded in 2017) to 53,750 properties with many more properties to be completed in 2022.

There are also currently 99,500 homes (including properties in the pre-application stage) to be completed in 2022.

The increase in demand for BTR properties has also spiked with the introduction of hybrid working as people are looking to find more suitable places to live and work at home.  

As a result of the pandemic, more people are deciding to rent for longer and looking towards the flexibility that it can provide. Given the current economic climate with interest rate rises and soaring inflation, it is no surprise that fewer people are looking to buy a property or take out a mortgage right now.

Subsequently, more people will end up renting for much longer, even for their entire lives and are more inclined to pay more to be able to get their ideal living experience. Rented spaces usually include extensive amenities like gyms, co-working spaces in a prime central location or in an area with access to great transport links. As such, renting is a much cheaper and more flexible way to achieve this lifestyle without being tied down by a mortgage, hence the continued growth in the Build to Rent market.

 

Rental Reform White Paper

One of the biggest changes to the private rented sector in over a decade will occur this year with the release of the policy white paper ahead of the Rental Reform Bill. The white paper was originally scheduled to be released in 2021, but the UK government decided to push the planned white paper on rental reform back to 2022.

In the Queen’s speech, last year, it was announced that the white paper will outline the government’s reform package for the private rental sector with regulations set to follow in due course. 

The reform package is set to include measures such as the abolition of Section 21, no-fault evictions, with the intention of improving security for tenants, in addition to strengthening repossession grounds for landlords when they have valid cause under Section 8. 

 

Hybrid working

Hybrid working is arguably one of the biggest trends to come out of the pandemic. According to Marie Puybaraud, the Global Head of Research at JLL, “This year has seen companies begin to fully grasp the fact that hybrid is something that will not go away.”

Studies have found that hybrid working has been more beneficial than being in the office full-time – employees’ efficiency and productivity have improved as less time is wasted without having to commute to the office. 

The increase of hybrid working has seen an increase in demand for properties with suitable spaces to work from home. Property managers are therefore marketing their properties accordingly in order to capitalise on this trend.

 

Innovations in proptech

During the pandemic, property management became increasingly complicated, with many agencies finding it difficult to carry out their duties within the parameters of lockdown and restrictions. Many therefore turned to proptech solutions to help them boost their efficiency.

Whilst many introduced these solutions out of necessity, the advantages and benefits they provide have proven to extend into a post-pandemic market. Proptech allows agencies to stay on top of their admin duties and provide tenants with a high level of customer support.

Due to this influx in demand for proptech solutions, we can expect to see new innovations in proptech emerging in 2022 that will have more immersive technology and stronger reporting & analytical capabilities.

 

The importance of sustainability

The importance of sustainability has been stressed to the industry especially since 2019 when the government announced the net-zero goal to reduce greenhouse gas emissions by a minimum of 100% by 2050 in comparison to the levels in 1990.  

CBRE predicts that the government will impose stricter regulations across the UK in 2022 in order to meet the net-zero targets.

The government has also made a requirement for all properties to have an EPC rating of ‘C’ or above by 2025, beginning with the new properties first and the existing ones by 2028.  

From 2025, there will be a £30,000 penalty for an invalid EPC (raised from £5,000). Property managers would benefit from putting a plan in place to raise the EPC rating of the current properties in order to avoid fines. 

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