Liverpool residential property market faces ‘perfect storm’

Banks reluctant to lend and ‘complex’ legislation on building safety is creating a ‘perfect storm’ in the Liverpool city centre residential property market, a local expert claims. Tony McDonough reports

Liverpool waterfront
Liverpool city centre’s residential sales market is facing a ‘perfect storm, says Alan Bevan. Picture by Tony McDonough


Liverpool city’s centre’s residential sales market is facing a “perfect storm” that threatens to cause a slowdown in the coming months, a local expert has said.

In his latest quarterly update, City Residential managing director Alan Bevan says the market is now being hit by multiple challenges caused by banks reluctant to lend and new legislation which is being criticised by surveyors for being “too complex”.

Alan said the market had been “ticking along nicely”, despite the uncertainties created by the Liz Truss / Kwasi Kwarteng budget in 2022 and the ongoing problems with cladding on apartment buildings.

However, just as the market was seeing “light at the end of the tunnel” more headwinds have arrived.

“Once the markets settled down in late 2022 / early 2023 mortgage rates began to stabilise and even drop from their highs,” said Alan. “While the prospect of higher inflation/higher rates was still an issue we thought we had seen the worst.

“Fast forward to July 2023 and we are now seeing mortgage rates surpass those from October 2023 as inflation pressures continue to linger and the Bank of England has been forced to raise rates higher and for longer than expected.

“In addition to the issue of rising mortgage rates we have also seen banks being extremely pedantic in their approach to lending.

“While we would naturally expect them to take a cautious stance given the economic backdrop, they have severely tightened what they will lend on, trying to negate some of their perceived risky lending. 

“This has led to many banks restricting lending on apartments in buildings, not just above licensed commercial premises, but all types of commercial premises.

“As the majority of apartment blocks in the city have commercial premises to the ground floor you can start to see the potentially damaging effects of this policy.”

Adding to the problems, added Alan, is the introduction of the Building Safety Act (BSA). This is meant to give residents and homeowners including leaseholders more rights, powers, and protections to make homes across the UK safer.

However, he claims much of its reforms are “unclear and ill-communicated”. He added: “Many conveyancers are refusing to act on leasehold sales.

“Those that are acting are concerned that the new rules are complex and not straightforward, creating a risk (insurance) to their role in the transaction.”

Higher interest rates were creating a buyers’ market, said Alan. He added those buyers who have cash are in a strong position to negotiate a better deal than those relying on mortgage finance.

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And he said: “We may also begin to see an increase in repossessions and insolvencies. Although it is early days into the tightening of interest rates, we are already seeing some increase in insolvency activity.

“Although, most of this is in the smaller developer market where borrowers have overstretched themselves, especially with short term borrowing. 

“The saving grace for many landlords will be the strength of the rental market and hence why any issues in the market over the next 12/18 months should be very small in comparison to the tough times of 2008 to 2011.”

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