This article is taken from the Winter 2024/25 issue of

Relocate Think Global People magazine

Click on the cover to access the digital edition.View your copy of the Winter 2024/25 issue of Think Global People magazine.

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“Striking a balance between sustainability goals and the practicality of relocation remains challenging, particularly when factoring in personal preferences and the challenge of finding good quality and affordable housing stock.”

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Chancellor Rachel Reeves’s Autumn Budget in the UK dealt a potential blow to landlords in the private rental market and may lead many of them to sell up, creating a housing shortage. This could have an impact on the supply of rental properties in areas with high demand, such as London and the major UK cities, which are prime markets for relocating individuals and families.“Landlords have been fleeing the property market in droves and the trend had been accelerating thanks to fears that Capital Gains Tax on residential property would rise in the budget,” says Sarah Coles, head of personal finance, Hargreaves Lansdown.NAVA Propertymark, an auctioneer, says it is concerned that a 2% increase in Stamp Duty on second homes or buy-to-let residential properties will lead to investors exiting the private rental market and reduce the supply of homes to rent, thereby leading to further rent rises for tenants.“Following the Budget announcement on the increase in SDLT [Stamp Duty Land Tax] on second homes and rental properties from 3% to 5%, coupled with many local authorities doubling council tax on second homes, there is little doubt that this will have an impact on investors and likely lead to them exiting the market, perhaps quicker than they had intended to with less homes to rent leading to increases in rents across the board,” says Stuart Collar-Brown, NAVA Propertymark president.

Impact of the Autumn Budget on mortgage rates

Sarah Coles says landlords also rushed to sell ahead of a speech they thought would contain a Capital Gains Tax (CGT) rise for investment property. It meant that extra buyer demand resulted in more sales rather than price rises. The speech did come with a blow for these landlords, but not the one they were expecting.Residential property escaped the CGT tax hike, while the Stamp Duty surcharge for second properties rose from 3% to 5%. The rise in the Stamp Duty surcharge will mean a bigger tax bill when landlords get into property. The ongoing freeze in income tax thresholds and less generous mortgage tax relief means they pay more tax on rent as they go along. Then, when they come to sell up, there is CGT to pay, which acts as a further disincentive to landlords and investors.It is also likely that buyers will have to contend with mortgage rates, which are likely to rise as a result of the Autumn Budget. “We can expect mortgage rates to climb,” says Sarah Coles. “The level of borrowing announced in the Budget last week didn’t impress the bond market, which pushed up gilt yields.”Liam Bailey, global head of Knight Frank's research department, says that while there was not an uprating of CGT on residential properties, which was good news for landlords, the environment created by the government is still broadly negative.“The flip side is that anyone in the market who owns property has seen and is probably likely to see above inflation rent rises,” he says. “Rents have risen quite strongly. Affordability is an issue, because in order to have a mobile labour market people need to be able to move around to take up jobs.”As private landlords start to retreat from the market, he predicts an increase in professional landlords, a trend which already seen in the growth of build-to-rent projects on a large scale in major European cities over the past 15 years.

What the Rental Reform Bill means for relocation

Another hotly debated topic in the UK’s rental market is the Rental Reform Bill, which seeks to address tenant protection and landlords' responsibilities. However, some industry experts argue that the reform could inadvertently harm the rental market. By imposing more restrictions on landlords, the legislation may act as a disincentive for landlords to invest in property, leading to a reduction in rental stock, particularly in cities already grappling with housing shortages.Unlike Germany, where 80% of housing stock is rented, the UK’s housing market relies more heavily on homeownership, with a far smaller proportion of rental properties. Tightening regulations on landlords may exacerbate an already limited supply of rental homes, particularly outside major cities. This could complicate relocations for professionals moving to areas with less rental availability, especially for those needing short- to medium-term housing for work assignments.The London rental market continues to face an imbalance between supply and demand, and while rents are expected to continue rising, the rate of increase may slow down.“The introduction of the Renters Rights Bill under the new government may lead to additional regulations impacting the market,” says Fruzsina Hodson, senior manager, group destination services at Santa Fe Group.

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Housing shortages across Europe are impacting relocation services

The housing shortage is not unique to the UK. Europe faces similar issues. In countries like Germany, although the rental market is large, there are significant challenges due to low housing mobility. Many tenants are hesitant to move, especially if they currently enjoy favourable rent deals. This reluctance mirrors trends in the US, where renters are choosing to stay put to avoid higher rates should they move and have to renegotiate a new rate, which has led to stagnation in the rental market in some regions.In both Europe and the UK, these dynamics make it harder for relocating professionals to find housing at reasonable prices, especially in more desirable urban areas and in the suburbs of major cities. As a result, companies relocating employees may need to diversify housing options, exploring locations outside of traditional high-demand areas. This shift could reduce rental costs, though it requires more proactive planning and a detailed understanding of local property markets.As rental prices continue to rise across the UK, particularly in cities like London, relocation budgets are increasingly strained. Companies are finding it necessary to rethink how they allocate budgets for employees moving to urban centres. In London, where rental prices can vary dramatically between boroughs, an effective relocation strategy might involve steering employees towards less expensive, but still accessible, areas.

Prioritising employee wellbeing and safety

In light of this, relocation experts are having to help manage both companies’ and assignees’ expectations, at the same time ensuring that the assignment rates positively for employee satisfaction.“There has always been a requirement obviously to look after the individual and make sure they arrive and settle in well,” says Simon Johnston, CEO of Icon. “We are finding now that there is a greater need to be more proactive even before the relocation starts. Some of this is educating people in cultures and customs and giving them a realistic view of what they might expect.  When somebody is relocating, it is a massive life decision and companies are having to balance assignee satisfaction against rising costs. By giving the relocating individual or family a mental map of how their experience might be, it helps to prepare them better.”He says that with discussions around mental health increasing, we may see relocation solutions going further than ever to look after assignees’ mental health and wellbeing and supporting them in adjusting to their host country.

The rise of environmental, social, and governance (ESG) standards

The impact of environmental, social and governance (ESG) criteria on the property and relocation market is growing. Companies are increasingly conscious of their environmental footprint and this is filtering into relocation strategies, refurbishing projects and client demands. For example, energy efficiency standards are becoming more stringent in the UK, with properties needing to meet certain energy ratings to be eligible for rent. While this is positive for sustainability, it reduces the pool of available properties. Older homes, often found in rural or suburban areas, may not meet these standards, further limiting housing choices for relocating employees.Additionally, there is a growing emphasis on reducing the carbon footprint associated with the relocation process itself. Some of this pressure comes from assignees and end users who want to live and travel as sustainably as possible. This includes initiatives such as streamlining shipping and packing up at the end of an assignment to avoid transporting unnecessary furniture and personal possessions. Striking a balance between sustainability goals and the practicality of relocation remains challenging, particularly when factoring in personal preferences and the challenge of finding good quality and affordable housing stock.“Companies are increasingly exploring ways to reduce relocation costs without compromising on quality of life for the employee,” says Simon Johnston. “This might involve reducing the volume of personal items shipped to the new location or opting for more streamlined relocation packages that encourage employees to sell or donate unneeded possessions before moving.”He says that while reducing the carbon footprint on a relocation journey is a priority, it is not always possible in some locations. Instead, it is a “balancing act” between what is desirable and what is achievable. “The conversation might be around can we be more proactive in helping somebody to make a decision about where they should be living, so their commuting time or miles are reduced,” he says.

The rental experience across Europe

Fruzsina Hodson, senior manager of group destination services at Santa Fe Group, says in Europe housing shortages, rising prices and new regulatory demands are all putting pressure on an already tight market.  Dublin, Ireland“The Dublin property market has shifted focus from availability to affordability,” she says. Despite improvements in supply, the affordability of properties has become the primary challenge. High-priced developments have intensified the issue, making it increasingly difficult for residents to access affordable housing options. The regional towns and cities outside Dublin are also facing similar affordability challenges with constrained supply and rising prices. New properties are gradually emerging, particularly in Dublin, but this has done little to improve the availability of affordable rental options. Key trends include the ‘45% rule’, where rent should not exceed 45% of the tenant’s net income, and challenges faced by pet owners who are often excluded from most rental options.Netherlands“The Dutch housing market is undergoing significant regulatory changes following the approval of the Affordable Rent Act in June 2024,” says Fruzsina Hodson. The new law, effective from July 1, 2024, introduces rent regulations for medium-price housing, easier rent reviews and enforceable rent increases. The legislation is expected to influence the rental market dynamics significantly, making medium-price housing more accessible. However, the shortage of available housing remains a challenge, particularly in popular cities like Amsterdam, where the competition for rental properties is fierce.GermanyGermany's rental market continues to face challenges. Limited housing supply, high rental costs and complex application procedures are major obstacles. “The market is especially tight in major cities like Berlin, Hamburg, Stuttgart and Munich, leading to fierce competition among tenants,” she says. Landlords have stringent requirements, often displaying preferences based on nationality, profession and family status. Social housing shortages and long waiting lists further complicate the situation. Tenants face high upfront costs and temporary accommodation while searching for permanent housing.Lisbon, PortugalThe Lisbon rental market remains highly competitive due to a surge in demand from foreigners and local families. Prices have risen significantly, with a shortage of long-term rental options across the city.“Securing housing early is critical as quality properties are rented out quickly, sometimes within hours,” warns Fruzsina Hodson. Landlords often demand higher deposits or long-term upfront payments. The rental prices are almost uniform between the city centre and the outskirts, as residents have been priced out of the capital. Temporary housing prices have also increased, especially during high-demand seasons.Porto, Portugal“Porto's real estate and rental market in 2024 is characterised by a shortage of properties for both short-term and long-term stays,” she explains. The tourism boom, favourable weather, and financial benefits have attracted a surge of foreign residents, pushing rental prices higher across the city and its outskirts. Limited supply and increased demand have led to competitive bidding wars and a fast-moving market. Tenants are being advised to confirm their rental choices immediately, as quality properties are often rented within hours of being listed. Long-term rentals in areas like Foz and Boavista remain in high demand and securing housing early is essential for successful relocation.Singapore“The Singapore residential rental market is experiencing a cooling trend in broader market segments while high-end properties, especially four-bedroom units, are seeing renewed demand,” she says. The overall rental index has declined for four consecutive quarters, with a significant 13.5% drop in Q1 2024. However, Q2 saw a slight uptick in activity due to the return of expatriates. The market is expected to stabilise further with consistent pricing across most districts. High-end properties continue to experience rent increases due to a spike in demand, contrasting with the stable or declining rents for most other property types. 

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