What to expect from buy-to-let property after Covid-19
Whilst the economy took a hit over the last two years due to the disruption of Covid-19, the housing market has remained strong, with both house prices and rents rising at a phenomenal rate. Being forced to spend more time at home has prompted both homeowners and tenants to assess their living conditions and consider whether their property is suited to their lifestyle, and if their current residence still met their requirements. Buy-to-let continues to remain a popular option, and many individuals during the crisis began to look at investing in property for the first time. So what can we expect from buy-to-let property post Covid-19?
Why is there such strong demand for housing?
The pandemic has introduced new demands from tenants, who are now not only satisfied with the right property, in the correct area, at the right price, but who are are also now looking for adequate space to continue the work-from-home lifestyle. Owning a buy-to-let property will bring security to landlords and it continues to remain a future-proof investment. Demand for housing has risen greatly and available property has fallen to record lows, meaning buy-to-let property is now in high demand. In addition, Britain was challenged by closed borders and the the multiple lock downs have impacted the supply of imported products and materials, in addition to local products also being in short supply.
In comparison to this time last year, the number of available rental properties is 50% lower and tenant demand is up by 6% across the UK as a whole, whilst Manchester and Liverpool are two of this quarter’s top five rental price hotspots, with asking rents increasing by 19.3% and 17.1% respectively compared to the previous year. In addition, Manchester and Liverpool have attractive employment prospects and offer better value, increasing the popularity of the location.
How have house prices changed since Covid-19?
According to the Land Registry UK House Price Index, the most recent figures that surmise the rise in prices are from February 2022, state that the average confirmed sales price of a property rose by 10.9% with a year-on-year comparison. The ONS have recorded that the average house price stood at £277,000, which was up from February 2021 by £27,000. The areas recorded for strongest annual growth with the property prices rising by 12.5% in the year to February 2022 were the Southwest and East of England.
Is property availability improving?
Within the UK, the total of mortgaged buy-to-let properties stands at 583,000, and during mid-2020, the number of buy-to-let companies rose from 200,000 to 269,300. There has been an increase in property companies due to the tax modifications that were introduced in 2017, which ultimately gave landlords interest tax relief, replacing it with a 20% tax credit in 2020, making it more financially viable for landlords to set up a property company and paying corporation tax in lieu of income tax.
Nine regions across the UK recorded more than a 10% rise in asking rents compared to the previous year, and demand for rental properties outside major areas have also increased and offer an attractive commuting distance and lower rents. However, recently there seems to be an increase in choice for rental properties, with new listings increasing by 16% during the first quarter of 2022. If this trend continues to rise, it could help create a better balance between supply and demand in the market.
What can we expect from 2022?
So, what can we expect from buy-to-let properties after Covid-19? A global shortage of building supplies has resulted in a lack of new properties in the UK market. In November 2021. the professional body Propertymark recorded the lowest ever supply of houses on record, however, in January, they recorded an 80% increase in housing stock, which should help the development of new property at a faster pace. A survey carried out by Simply Business found that landlords are intending to reduce their portfolios, which again, would have an impact on improving housing supply levels. Zoopla predicts a further 3% increase in house prices for the coming year.
If you require any assistance on your current property, or are looking to expand your property portfolio, please don’t hesitate to contact our experienced team.