What kind of market is emerging for landlords post-pandemic – are there grounds for optimism or do existing landlords express notes of caution? Will homebuyers be making a similar balance as they approach the emerging new property market?
These and other themes have hit the headlines in the past week or so – let’s take a closer look.
Number of landlords fall to a seven-year low
The worrying exodus of landlords from the buy to let sector is continuing unabated, revealed estate agents Hamptons at the start of February.
At the end of 2020, there were an estimated 2.66 landlords in the UK’s private rented sector. That represents the lowest total in seven years – and is 222,570 fewer landlords than at the peak in 2017. You would need to go back seven years, to 2012, when the figure was lower – then, 2.58 million.
The reasons for what may be a critical gap between supply and demand for rented accommodation are pretty much as expected – an increasingly strict tax regime and ever tighter regulation.
A further trend continues. While the overall number of landlords falls, the average number of rental properties owned by individual landlords continues to rise – so that 30% of landlords now own more than one property.
Rogue landlords fined
For their failure to provide tenants proper washing facilities, for not implementing adequate fire safety measures, and failing even to have the necessary licence to operate a House in Multiple Occupation (HMO) two co-landlords in the London Borough of Hackney have been fined a total of £22,000.
The rogue landlords’ failure to follow basic hygiene and safety standards left tenants in illegal and dangerous living conditions, argued the Council, in a court hearing to which the defendants chose not to appear.
Rental demand soars in commuter belts
Online listings site Zoopla has revealed a surge in demand for rental properties in commuter zones (outside London) or close to well-connected cities.
The boom comes as renters look to spread their wings and escape the confines of city life for a “once in a lifetime” move to a quieter environment in which there is more room to move.
According to Zoopla, rental demand has grown by some 21% in these areas – and houses to let are being snapped up 30% more quickly than they were just 12 months ago. Inevitably, therefore, rents have increased – by 2.3% in the past year, so, reaching their pre-pandemic levels.
The pandemic has spurred on renters to buy
The combination of rising rent levels and a craving for more space in which to live and work from home also seems to have motivated more tenants to think instead about owning their own home, said Property Wire last week.
In a survey of those currently renting, almost a half – 45% - said that they aimed to own their home at some time in their lives. More than a quarter – 26% - are even now saving for the necessary deposit. Those ambitions for homeownership are most pronounced in London, the southeast, and Northern Ireland.
Neither do the homeownership ambitions seem to be thwarted by the financial challenges – of which the need to raise a deposit is the biggest obstacle to 30% of those surveyed and the search for affordably priced houses for a further 13%.
Buyers continue to seek space over location
Homeowners are also giving serious thought to selling up and moving to the outskirts of the city where more space is promised – not just in the home itself but also in the surrounding environment.
This has fuelled an increased in London property prices – of 3% from January to February (compared to a national increase of just 0.5%) – reported the London Evening Standard this week. The healthy bump in London house prices has brought them almost to pre-pandemic levels.
While city-based owners may be eager to sell, buyers are likely to be less so now that the end of the Stamp Duty holiday is on the horizon at the end of March – and there is precious little prospect of completing and transaction before that deadline. At present, it takes an average of 72 days to complete the purchase of a home in London – and that is up from the average of 62 days in January.
Market analysts cited by the newspaper, however, predict that February’s dip may be no more than a temporary blip with the London property market anticipated to perform rather better during 2021 and the following four years than the underlying data currently suggests.