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 UK buy-to-let is still high.
In a survey of UK mortgage brokers, 41% said they expected buy-to-let business to increase for them over the next year. More than a quarter (28%) said they expected buy-to-let mortgage demand to remain stable.
Despite ongoing uncertainty caused by coronavirus, what remains unchanged is the need for rental property. Although many people were unable to proceed with purchases and rental agreements during 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.
“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 and shares and other more volatile assets, property as a long-term asset is seen as a stable option.
Despite short-term peaks and troughs, the UK housing market has continued to inflate over the years. In fact, UK house prices have almost tripled over the past two decades.
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, which is reflected in the results of this survey,” 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 clear and damaging 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
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.
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Author: Eleanor Harvey
