Interest rates up, Boomin going down - Property news roundup
There's a whole lot going on in the world of property right now, so we're sharing a roundup of everything you need to know. Interest rates going up, Boomin going down, and everything in between - find out the details in this post.
Hold on to your hats, folks. The Bank of England has just announced that interest rates will rise again - this time by 0.75% to 3% - which happens to be the biggest hike in 33 years. Ouch. It’s all part of the plan to tackle the UK’s soaring inflation rate of 10.1%. This nosebleed-inducing hike means that many people’s monthly mortgage payments will go up once more - not exactly what we want to hear in the middle of a cost of living crisis.
There is some slightly more reassuring news, though. Economists believe that there will be less aggressive monetary tightening than expected in the future. Although the reason for this isn’t exactly brilliant - it’s because economic growth is forecast to be weak so the BoE needs to tread carefully - at least interest rates are now expected to peak at 4.5% by May next year rather than the previously projected 4.75%. And don’t forget that some had feared they might rise as high as 6%.
As always, we recommend staying calm rather than panicking. Media outlets love putting the fear of God into us - it’s what makes us click on their articles - so let’s try to put these rises into perspective. As our Residential Expert, Mark Hayward, reminded us last month, rates were frequently above 5% in the mid-90s and noughties. And they bounced around between 8 and 17% in the ten years before that. Therefore, it’s important to remember that nobody, not even the most extreme voices, are predicting anything as severe as what we saw back then.
Gove returns
In other news, Michael Gove is back in the saddle as Secretary of State for Housing and Levelling Up. This is good news for those eager to gee up the Renters Reform Bill, as Gove was its primary architect. In fact, he’s already reiterated his desire to implement a Decent Homes Standard (amongst other ideas) when doing the media rounds at the weekend.
The other issue that Gove raised was the government’s manifesto pledge to build 300,000 new homes every year by the middle of the decade. This target was scrapped by Liz Truss - who called it ‘Stalinist’ for some reason that we can’t quite fathom - but has since been restored by new PM Rishi Sunak. Mr Gove did warn, however, that meeting this target would be a tad tricky due to global supply chains and the tight labour market.
Although governments have been promising to build more homes since Larry the Downing Street cat was just a kitten, at least the government has publicly recommitted itself to build more homes. This is, after all, the best way to ease the housing crisis. What’s more, at least Michael Gove is already familiar with the problem. We’ve had far too many new faces in the Department of Housing in recent times.
The only thing that slightly worries us, however, was Gove’s renewed determination to crack down on rogue landlords, who he described as “chancers leaving people in dire circumstances”. Obviously we’d like to see rogue landlords penalised just as much as any fair-minded B Corp. We just hope he remembers that most landlords are good guys in a bad situation. Landlords, per se, should not be demonised.
Boomin Implodin’
Next on the agenda is news from Boomin, the portal that promised to take the sector by storm when it exploded on the scene last year. With sexy new features like MatchMaker, Sneek Peek, and SmartVal, the company seemed in pole position to challenge Rightmove and Zoopla. It seemed to have a reasonable start, too. It launched with a high-budget TV advertising campaign and attracted investment from the likes of Foxtons and DN Capital.
One year on, however, and Boomin’s fire has already gone out: they’ve called in the liquidators after being unable to access new funding. Founders the Bruce brothers, who had previously established Purple Bricks, are blaming the housing market slowdown for the company’s woes. However, not everyone within the industry is convinced...
Although an increasingly tech-savvy public seemed ready to embrace Boomin’s new approach, the response from many agents was lukewarm. Some doubted whether agents would be prepared to pay for the new portal’s services. Meanwhile, others in The Negotiator complained that their system “doubled an agent’s workload” and that leads were “never properly qualified”. Some even questioned Boomin’s strategy, claiming it “felt like a hub proposition of messy ideas”.
One wonders, however, how objective these criticism were. After all, there’s clearly an element of Schadenfreude doing the rounds. The Bruce Brothers have always been public enemies numbers one and two in many eyes because Purple Bricks challenged the traditional agency model. One opinion piece in Property Industry Eye, for example, even led with the headline Ha, brilliant! Boomin has gone bust.
Whatever you thought of Boomin, it’s always incredibly sad to see a company go out of business. Lost jobs, lost friendships, and very difficult moments for the founding team and all stakeholders involved. We’re sure the Bruce brothers and their people will go on to do great things in the future. Onwards.
Get set for COP27
Before we sign off, we wanted to remind you that COP27 begins this weekend in Sharm El Sheikh. Although this isn’t directly related to the property sector, climate change is an issue that affects us all. What’s more, with all newly rented properties requiring an EPC rating of C or above by 2025, energy efficiency is clearly in the government’s thoughts as the UK strives for net zero.
COP27 is particularly significant because it marks the 30th anniversary of the United Nations Framework Convention on Climate Change (UNFCCC). It’s also seven years since the important Paris Agreement in 2015, which hoped to limit global warming to 1.5 degrees at best or 2 degrees at worst. This year’s conference will measure progress towards this goal whilst also assessing progress on the plurilateral deals thrashed out at COP26 - most notably the pledges to phase out fossil fuels and deforestation. No wonder many are referring to this COP as the ‘Implementation COP’.
It’s vital to keep momentum going because emissions are actually still rising: they’re at record highs and well below the 45% reduction needed to keep warming to 1.5 degrees. Indeed, current pledges would likely see catastrophic warming of 2.5 degrees by the end of the century.
Consequently, we’re delighted that Rishi Sunak has decided to attend COP27 after initially saying that he’d focus on domestic issues instead. Although diplomats and civil servants do the actual negotiations, the presence of world leaders galvanises the talks, puts them in the public eye, and helps to get agreements over the line.
We’ll let you know how this year’s talks went after COP27 closes on 18th November, just like we did for COP26 last year. Until then, watch this space. But make sure you turn your thermostat down and monitor your energy use while you do it. Nag, nag.