Growing numbers of landlords and property investors are seeking new buy-to-let property compared to 2019. Spurred on by the stamp duty holiday, a new report reveals the latest trends…
The private rented sector could be in for a boost in 2021 as interest in buy-to-let continues to climb. It seems the events of this past year have spurred many property investors into rethinking their investment strategies.
At the end of 2019, only 3% of landlords said they planned to buy another rental property, according to a survey by insurance provider Simply Business. Now, that figure has risen to 10% of landlords who have plans to invest in a buy-to-let. Furthermore, only 5% now say they wish to sell an existing rental home.
The firm says that the change in attitude from investors was most marked after the stamp duty holiday announcement. In July, Chancellor Rishi Sunak declared that homes worth £500,000 or less would be exempt from the tax until 31st March 2021. While the 3% surcharge still applies to additional homes, this is still a big saving for landlords.
Over recent years, the private rented sector has faced some challenges. Mortgage interest tax relief changes have affected many landlords, as well as the 3% stamp duty surcharge. Licensing schemes for certain properties are also becoming more widespread, while rules around EPCs and other aspects of renting a property have been introduced.
Many in the sector argue that some of these changes are positive. Greater regulation can raise standards in the industry and encourage more professional landlords to enter the fold. However, it has led to some exits from the buy-to-let market, particularly by smaller or accidental landlords.
The latest survey results from Simply Business suggest there could be renewed confidence in the space, though. This past year, landlords and tenants have largely worked together through some difficult times. As a result of the pandemic, some people could remain in rental homes for longer as they put buying plans on hold. Equally, others may have reassessed what they want from their accommodation, and many property investors are adapting to this.
City centre still key for investment?
Simply Business points out that property searches have doubled for homes in smaller towns and villages (Rightmove) this year. Life in lockdown has certainly taken its toll on tenants as well as homeowners.
Alan Thomas, UK CEO at Simply Business, says: “The coronavirus outbreak and consequent lockdowns have been transformational in UK renters’ attitudes towards property, and therefore where landlords are looking to make their next investment.
“The pandemic has resulted in people spending more time at home – both for work and leisure, while many of the benefits of city living have been impacted. It’s no surprise to see that renters are valuing larger properties with outdoor space.”
“There appears to be a shift in terms of what is considered a desirable property by tenants, and residential landlords – crucial to both the economy and the local communities where they provide housing – along with the market in general, are reacting to this.”
However, it is still possible to strike the right balance when investing in a city centre property. Many new-build rental homes in particular are designed to cater for renters’ needs, with communal spaces both inside and outside. Some new developments are being built alongside new parks and green spaces in urban areas. There is also currently more of a focus on cycle lanes and pedestrian highways in cities and town centres.
While huge number of employees with office jobs continue to work from home, this is not the case for everyone. Furthermore, while some companies may continue to offer home-working in the long-term, many others will be keen to get people back into offices when they can. As a result, there will still be a significant need for buy-to-let properties in city centres to fill this need.