Rising interest rates and falling house prices have raised fears of another property market crash.
There’s been much debate about whether this represents the ‘new normal’ after years of rock-bottom mortgage rates.
As someone who has spent more than 30 years working as a solicitor in Bath, I am more optimistic about the future of the local property market.
I can remember when I first moved to the South West in the late 1980s during another period of high interest rates. I had just qualified as a solicitor and bought a house in Bristol while working in Bath.
When the time came to sell, however, my mortgage was higher than the value of my house. I had to take out a loan to pay for the negative equity, which was an unpleasant experience. The market corrected itself over time.
In 2007, we had the first run on a UK bank since the 19th century, which resulted in the collapse of mortgage lender Northern Rock. Who can forget the unprecedented scenes of worried savers queuing up outside branches across the country.
House prices and volumes of property transactions dropped significantly as a result of the financial crisis. The law firm I worked for at the time had a large conveyancing department and, sadly, made some people redundant. House prices gradually recovered.
Back to today and despite fears of a housing market crash, the inflation rate has slowed and may have peaked. At some point, perhaps next year, industry experts predict that interest rates might even start to go down. This will be good news for first-time buyers and those looking to move house.
A great place to live
Despite the uncertainty, the Bath housing market usually enjoys a certain degree of insulation during periods of economic crisis. That’s because Bath is such a desirable place to live and it usually fares better than most other towns and cities.
Indeed, our conveyancing team continues to see good demand for property in Bath, whether it’s people relocating from London in search of a better quality of life or those looking to buy student houses for their offspring, or as an investment.
If you have cash to invest and don’t require a mortgage, then buy-to-let property is an attractive option because rents are going up and there’s greater demand for rental property.
But bear in mind that the government is planning to introduce new minimum energy efficiency standards for landlords. This may require all rental properties to have an EPC rating of C or above by 2028.
Landlords may have to pay significant sums of money to increase the energy rating of their properties, whether it’s paying for new windows and boilers or flooring and insulation. How it would apply to listed buildings is an unknown.
Reasons to be cheerful
There are good reasons to be optimistic about the future of Bath’s property market.
We are investing in our conveyancing team at Mogers Drewett. I recently joined the firm and we have appointed another residential property partner, who is joining our team in the autumn.
This optimism is shared by other property professionals I speak to. One of the advantages of having worked in Bath for so long is that I know most of the estate agents and other solicitors in the city.
At the end of the day, people want to buy or sell their homes as quickly and painlessly as possible, especially during uncertain economic times. It’s helpful to have solicitors and estate agents who know each other well and can get the job done.
Robin Phillips is a partner at South West legal and financial planning firm Mogers Drewett. He has more than 30 years’ experience working as a residential property lawyer in Bath.
For more information visit www.mogersdrewett.com
