Is becoming a property investor easier and more attractive post COVID?

Total Landlord Mortgages investigates the impact COVID-19 has had on the buy to let market and explains why now, with restrictions easing and life returning somewhat to ‘normal’, is a good time to invest.

The COVID-19 pandemic may have hit the economy hard, but the buy to let market continues to boom. In 2021, more property investors than ever have formed companies to purchase buy to let homes and rents are primed to rise beyond expectations.

Companies House figures reveal that almost 42,000 companies were incorporated by landlords last year – a 23 per cent increase compared to 2019.

That takes the number of buy to let companies to a record total of 228,743, with almost half of these based in London and the South East.

Meanwhile, letting agent trade body, Association of Residential Letting Agents (ARLA) says 60 per cent of landlords increased their rent prices in March 2021. This is due to the fact that there are fewer properties available to rent but a growing number of tenants looking for a place to live.

So, with demand for rental properties outstripping supply and buy to let continuing to boom, is becoming a property investor easier and more attractive post-COVID?

As the nation emerges from lockdown and prepares for life after the pandemic, we asked Total Landlord Mortgages Principal, Daniel Lee, the frequently asked property investment questions.

Will buy to let mortgage interest rates rise?

Bank of England interest rates have stayed at a historic low of 0.1 per cent since March 2020 and are likely to stay at this rate for some time. The low interest rates were introduced during COVID-19 to encourage the economy to grow and are expected to remain as we come out of the impact of the coronavirus pandemic.

Will there be a property crash?

“This reminds me of a talk I went to around seven years ago with the leaders of the banking industry; one of them said that if there is an economic crash or the stock markets crash you will not see the Government stepping in to stimulate or prop up the economy.

However, if there is a chance the housing market will crash the Government will always make moves to strengthen and support this sector, which is exactly what happened in 2020 when the Stamp Duty Land Tax holiday was introduced for first-time buyers and movers.”

Daniel Lee, Total Landlord Mortgages

Has COVID-19 changed the rental market?

Bricks and mortar have never been more important. For the majority, the house you live in has also now become the place you work and socialise from.

Because of the lockdowns and social distancing restrictions enforced by COVID-19, more people are working remotely from home than ever before and space for a home office has become a priority to tenants.

The need for this extra space is something potential landlords are looking for in their new rental properties as they look to make them more attractive to  prospective tenants.

As well as office space, the pandemic has also made tenants appreciate outside areas and private gardens. Tenants are now increasingly looking for homes with a garden or outside area to relax and socialise in, whereas this may not have been a priority previously. A KFH study showed that 58 per cent of tenants say access to private outdoor space is paramount, and Ome’s rental market predictions highlights the shift out of cities to meet tenants’ increased requirement for outdoor space.

Are staycations attractive for holiday let investors?

Holiday home sales in the South West, Wales and the Lake District are booming as holidaymakers opt for UK breaks over international holidays due to COVID-19 travel restrictions, according to lender Hodge Bank.

Buyers are paying an average £401,000 for their holiday home, with the number of loan applications doubling in North Wales around the Lleyn Peninsula and Snowdonia.

Typically, the yield from a short term holiday home let is higher than that of a similar buy to let home, and the tax breaks are more attractive than those of other property investments.

For landlords looking for insurance to cover a holiday let, Hamilton Fraser Total Landlord Insurance offers a tailored UK home insurance policy as part of their landlord insurance offering, that provides comprehensive cover for holiday homes, whether they are for family use or let on short term rental agreements.

Are rents likely to continue to rise?

The latest official data from the Office for National Statistics shows that rents have increased on average 1.4 per cent year-on-year each month since January 2020 and a staggering 10.2 percent in the last six years (since 2015). Meanwhile, letting agents report that the supply of rental property has fallen for four months in a row, yet tenant demand is rising, which supports the reason for the increase in rent costs.

The Royal Institution of Chartered Surveyors (RICS) echoes this analysis, forecasting a three per cent rise in rents across the country excluding London, where they are expected to fall flat. This is likely to be because with more people working from home, the need to live in London has decreased.

The balance of supply and demand is tilting towards landlords and is likely to result in rents rising until the market adjusts again.

Are landlord mortgages easy to get?

Lenders still have an appetite for buy to let mortgages and the good news is that some are easing borrowing rules for landlords.

Total Landlord Mortgages can share some exciting news that helps borrowers who may have struggled to find a loan before. Find out more here.

Our lenders are now offering mortgages for individuals and companies that cover the following:

• Buy to let with just 100 per cent rental multiples
• Residential property, including ex-local authority homes; semi-commercial units; multi-unit freehold blocks (MUFB) and houses in multiple occupation (HMOs) above commercial premises
• Second homes, including AirBnB rentals and holiday lets
• First time landlords
• Foreign nationals
• Expats
• Borrowers with poor credit histories
• Loans for partnerships, trusts, limited companies and offshore companies

Total Landlord Mortgages can also help landlords transferring property from individual holdings to companies for zero consideration.

This should interest landlords looking to change their business status for tax purposes who are worried about the implications of stamp duty and capital gains tax when making the transfer.

Call Total Landlord Mortgages today on 033 224 8918 for advice and guidance to finding the right financial solution for you. Or alternatively request a call back for a mortgage quote here.

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