Property investors focus on rate cuts ahead of politics

10 July 2024

  • More than half say hopes of base rate cuts are boosting market optimism but they are unworried by UK political change and global geopolitical uncertainty

  • Handelsbanken Property Investor Report shows tenant stress is starting to ease

Property investors are cautiously optimistic and focusing on the prospect of base rate cuts ahead of UK and global political issues, according to a new study.  

Handelsbanken’s latest ‘Property Investor Report’, based on exclusive insights from UK property investors with an average of 35 properties each, found more than half (52%) say the prospect of a rate cut in August and potentially a further cut before the end of the year makes them more optimistic about the market.

That is partly reflected in the easing of signs of tenant stress – around 53% of those questioned reported issues of rental deferral / contract negotiations, compared with 60% in Handelsbanken’s 2023 report. The number experiencing overdue or late payments fell to 34% this year compared with 41% in the previous year.

Despite the drop in reported tenant stress, void periods have increased. 60% of the panel reported an increase in voids, up from 54% in the previous year although Handelsbanken believes this may be partly driven by tenant demand for quality and EPC ratings.

Polled ahead of the general election, the panel reflected wider market sentiment on the impact of a change in government, with the majority (51%) saying it would not affect plans for their business. Around two-fifths (40%) said geopolitical uncertainty made them more positive about the UK property market while 44% said it had no impact. 

Simon Bradley, Chief Credit Officer at Handelsbanken said: “There is cautious optimism around the property market and activity amongst existing investors is picking up. It may be that many have decided the economy has potentially reached the top of the interest rate cycle and that the time is right to engage in new deals. We are seeing many of our Handelsbanken property professionals already looking to increase their credit lines in anticipation of potential acquisitions as market rates soften and property values stabilise over the coming months.

“The report also shows signs of tentative improvements in the stress factors affecting tenants, which have been driven in recent times by the cost of living and energy crises. However, most respondents appear unaffected by potential political uncertainty and don't believe that a change in the party in government will lead to significant changes in the market.”

Read the 2024 Handelsbanken Property Investor Report.
You can also view previous reports on this link.

-ENDS-

Media enquiries

Patrick Evans /Camilla Wyatt

Citigate Dewe Rogerson

handelsbanken@citigatedewerogerson.com

Notes to Editors

  • *Handelsbanken commissioned research in March 2024 through independent research company Pure Profile among a panel of 200 property investors across the UK. They included 17 respondents in Wales, the East Midlands, East of England, London, North East & Cumbria, North West, Scotland, South East and the South West. There were 16 respondents from Northern Ireland, Yorkshire & The Humber and 15 from the West Midlands. The sample was broken down with 35 owning outright or with a mortgage between five and 15 properties; 35 owning outright or with a mortgage between 15 and 25; 35 owning outright or with a mortgage between 25 and 50; and 95 owning outright or with a mortgage more than 50 properties. Around 28.5% classified their business as real estate investment, while 33.5% classified their business as property management, and 38% classified their business as landlords (residential or commercial). More than half (51.5%) of the total sample owned student lettings or HMOs as part of their portfolio, while 50% owned non-student lettings or HMOs; 26% owned static park homes; 58.5% owned offices; 51.5% owned retail properties; 45% owned industrial properties; 12% owned leisure properties and 8.5% owned healthcare properties including holiday parks and hospitality. The average portfolio comprised 35 properties, with the mean individual property value across all portfolios standing at £263,900. 

Information on Handelsbanken plc

Handelsbanken is the trading name of Handelsbanken plc, which is incorporated in England and Wales with company number 11305395. Registered office: 3 Thomas More Square, London, E1W 1WY, UK. Handelsbanken plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number 806852.

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