In the UK, the number of buy-to-let landlords has reached 2.7m, which is an all-time high. What is making the buy-to-let sector so attractive for investors?
Over the last five years, the number of buy-to-let landlords has risen a whopping 49% from 1.8m to 2.7m, according to London agency ludlowthompson. Despite tax changes in recent years, landlords and investors have found ways to adapt.
There has even been a significant increase in demand from first-time buy-to-let investors and landlords as many have been taking advantage of the stamp duty holiday and low mortgage interest rates. Additionally, while stocks and shares have been volatile, property has remained a more stable form of investment.
Rental returns remain stable
Even through COVID-19, income from residential rental properties has stayed relatively stable. Out of the 1,500 tenancies managed by ludlowthompson, only 4% of tenants had to be put onto a rental deferment plan during the third quarter of 2020.
Stephen Ludlow, chariman at ludlowthompson, feels the level of resilience seen in the property market this year throughout the coronavirus pandemic is comparable to that seen following the 2008 financial crisis.
He says: “Residential property has proven to be a reliable source of income for buy to let investors, particularly compared to other asset classes such as equities, which have seen high levels of volatility in 2020.”
Increasing demand in the rental market
Across the UK, renting is still on the rise. In recent months, there has been a surge in rental demand. The average time it takes to rent a property has decreased across the board, decreasing void periods for landlords. This further shows the growing demand seen in the sector.
The increasing number of prospective tenants is due to a number of reasons. Job uncertainty will likely lead to people continuing to rent for longer. Additionally, owning a home is less of a priority for Generation Rent as many enjoy the flexibility that comes with renting.
Adapting to changing priorities from tenants
In the wake of COVID-19, rental trends are changing as many people’s priorities are shifting. Tenants are prioritising more space, both indoors and outdoors, after being in lockdown and spending more time at home. Location preferences are also changing as many people want to live closer to public parks.
Build-to-rent developments could become extremely appealing for tenants as they are geared specifically towards tenants. This type of accommodation often provides attractive urban locations and appealing amenities, including dedicated workspaces and social areas.
Rental properties that offer more room, high speed internet and office space have been in extremely high demand. And this could lead to long-term shifts in the private rented sector. Buy-to-let landlords should look at adapting their property investments to fit the changing needs of tenants.
Stephen Ludlow comments: “In order to attract prospective tenants, landlords should ensure that space in their properties is optimized. Home offices or space for workstations have become a highly sought-after feature, as has accessibility to high speed WiFi.”
Choosing the right property and knowing what tenants prioritise can help buy-to-let landlords earn more from their investment. BuyAssociation has a range of property investment opportunities across the UK. Sign up for free to get early access, or get in touch for more information.
