Landlord market bouncing back after lockdown
It’s an understatement to say, no one’s had the best start to the year. Individuals, businesses and entire industries have been impacted by the Coronavirus crisis on a huge scale. Some sectors have coped better than others.
In terms of the property market, residential rents and tenant demand have proved to be resilient in previous economic slumps. So, what effect will lockdown and the current downturn have on the UK’s rental market?
As more businesses get the green light to reopen their doors, the signs suggest the property rental market is bouncing back. But before landlords breathe a collective sigh of relief, here’s what to expect from the rental market in the rest of 2020 and beyond.
Rental landscape beyond lockdown
When the housing market reopened in May, Rightmove reported visits to its website rose by 45% overnight. There was a similar picture elsewhere. Data from lettings platform Goodlord revealed a 111% rise in new tenancy applications at the start of June compared to 2019 levels.
Meanwhile, Savills has predicted that even if rents do fall after the pandemic, they are likely to pick up again fairly quickly. The estate agent had previously predicted UK rents would increase by an average of 15.4% between 2020 and 2024, but even in the current crisis, it has forecast growth will only drop slightly to 13.6%.
Tenants who are looking to rent know what they want. Estate agents across the UK have seen a shift in renters’ priorities post-Covid. Unsurprisingly, top of renters' wish lists are homes with office space, properties close to parks and green spaces, and houses and flats with gardens or a balcony.
Buy-to-let properties in high demand
Rental market activity levels may yet to reach the figures seen at the end of last year, but buy-to-let properties are in high demand across the UK.
According to Paragon Bank’s most recent financial adviser confidence tracker index, 41% of mortgage brokers expect to write more buy-to-let businesses over the coming year. That’s up from 38% from the final quarter of 2019.
As Richard Rowntree, managing director of mortgages at Paragon Bank explains: “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.”
As more investors look to the private rental sector, growth in the rental market looks set to continue into the second half of 2020. This growth will be boosted further as we get greater clarity on how universities will operate from September.
While from a corporate rental perspective, demand will be bolstered as companies who put their relocation plans on hold because of the pandemic restart that process as they transition from remote working back into an office environment.
Ban on high street business evictions
And there’s good news for the UK’s high street as well. In June, the government extended a ban to help protect struggling retailers from eviction.
When companies had to close sites in March, the government said no businesses would be evicted if they missed rental payment. These rent breaks came to an end on 30th June, following the easing of lockdown, but have since been extended until September.
The hope is that as many businesses as possible will emerge from the pandemic in a strong position to bounce back. The extension is part of the government’s wider plans to help local business plan for economic recovery.
The government has also been working on a code of practice with landlords and tenants to ensure clarity surrounding rental payments and to give all parties the support they need during these challenging times.
Protect yourself with landlord insurance from Stride
Here at Stride, we have more than 40 years of experience working with landlords to find tailored solutions that meet their needs.
Stride can help protect you while you and your tenants get back on your feet following the crisis and as we all get used to the ‘new normal’.
Whatever your circumstances, find out what Stride can do for you. If you are new to the buy-to-let sector or your landlord insurance is soon due for renewal, call our team today on 0800 840 6699 to find out more.