UK real estate companies expect London buy-to-let business to be growing over the next 12 months. What makes the sector so resilient to adversity?
The latest research published by Paragon Bank shows a continued optimism among professionals within the buy-to-let industry. Despite the impact of coronavirus on the global economy, the results show that appetite within London buy-to-let is still high.
In a survey of UK mortgage brokers, 41% said they expected buy-to-let business to increase over the next year. More than a quarter (28%) said they expected buy-to-let mortgage demand to remain stable. Buying real estate assets in the UK requires careful financial planning and structuring. Vogue Properties partners with leading mortgage broker companies in London and offers professional support in mortgage planning.
Despite ongoing uncertainty caused by a coronavirus, what remains unchanged is the need for rental property. Although many people were unable to proceed with purchases and rental agreements during the lockdown, activity has thrived since the government eased restrictions. There is also evidence that people may continue to rent for longer until some of the uncertainty has passed. This means more demand for buy-to-let. The value of a well-managed property is a key to maximizing one’s return on investment. Vogue Properties is proud to offer individual support to deliver high-quality property asset management in London for you and your tenants.
“Long-term fundamentals” of buy-to-let
UK property is a popular investment option, and this is particularly the case during times of uncertainty. Unlike stocks, shares and other more volatile assets, property as a long-term asset is seen as a stable option.
According to Richard Rowntree, managing director of mortgages at Paragon Bank, this long-term view is what underpins the sector. “Despite the buffeting, that coronavirus has caused to the mortgage market, and housing sector more broadly, there is clearly still strong and stable demand for buy-to-let via intermediaries”, he commented.
“We have seen a solid rebound in buy-to-let business since the housing market reopened in mid-May and landlords have been unlocking capital to invest and grow their portfolios further. We expect to see increased demand for rented property underpinning growth in the coming months as people delay house purchase or cannot obtain a mortgage with the removal of higher loan to value products in the residential market.
“Coronavirus has had a tremendous impact on the economy and the UK as a whole, but the long-term fundamentals underpinning demand for buy-to-let remain unchanged. The UK has a growing population with increasing numbers of households and the private rented sector will provide a good quality home for many of them.”
Changing needs in rental property
Asking rents in several inner London boroughs are now at their lowest levels recorded since records began in 2011. This increase in affordability is raising the demand for rental properties in inner London, with some areas becoming accessible to middle-income earners for the first time in years. Across London, rents relative to earnings are the most affordable that they have been in a decade at 42% of a single earner’s average income, down from 49% last year – but this is of little benefit to those Londoners that have lost work or income during the pandemic.
There’s a higher proportion of renters to homeowners in the UK than ever before. According to the latest government figures, there are now 1.7 million more renting households than 10 years ago. There are also more people than ever living alone, with more than eight million solo dwellers in 2018. These individuals are more likely to live in rental homes.
The number of people in higher education is also increasing, leading to more people in the PRS. Most graduates live in rented accommodation before they are in a position to buy. Many people now don’t get on the property ladder until they’re in their 30s. This gives more flexibility in terms of employment options, and longer to save for a deposit.
During the COVID-19 outbreak, the number of people working from home has soared. This means priorities for both buyers and renters have changed. This is reflected in the type of UK buy-to-let properties that are likely to be in higher demand. People now place more value on outside space and internet connectivity, as well as communal areas and workspaces. Living close to work or transport links may slip down the priority list; however, it will still be a vital consideration for many.
