"It simply gathered its own momentum as many looked to invest in property; including both those looking to expand their portfolio and those considering investing for the first time."
None of us really knew how the situation was going to play out, and there were dark days ahead for many. The onset of the pandemic brought with it an economic stutter, whilst across the globe we took a deep breath and gathered our thoughts before asking, ‘What now?'. At SimplyBiz Mortgages, our immediate concern was how best to support our members whilst we assessed what kind of recession might impact the markets. As those of us who have been in the industry for some time know, one of the first areas that usually takes a hit is the mortgage market, where rates rise and put the aspirations of those considering house purchase on a higher shelf than they are able to reach.
Yet, as the mist started to lift a little, and the banks found their way back to a level of service provision, the housing market was still there. In fact, it was there and stronger than ever for a host of reasons. The stamp duty holiday and the fact that lockdown had made many - whether homeowners or tenants - assess their lifestyles, space and whether where they lived gave them what they needed, and house sales took off. Buy-to-let had been strong to this point, having made a good recovery after the taxation and regulatory changes of earlier years, and it simply gathered its own momentum as many looked to invest in property; including both those looking to expand their portfolio and those considering investing for the first time.
As part of the general reactivation of the market, rising house prices boosted tenant demand, as reported by Shawbrook Bank in its ‘Changing face of buy to let report’ released in 2021, which demonstrated that the property value in the buy-to-let sector grew by 5.8% in 2020. This growth extended into 2021, throughout which our members told us consistently us how busy they were. Reports from our lender panel strongly support this, and I look forward to seeing the revised assessment in coming weeks.
During this period, brokers were also increasing needed to advise their landlord clients on how best to manage tenants who, through no fault of their own, were struggling. We saw a particular increase in those who couldn’t access furlough payments and payment holidays or rent reductions were often needed in these cases to ensure they retained a previously reliable tenant. Demand for homes with more space and a garden, as well as coastal and rural areas, grew as some pursued their dreams, often renting in areas where they thought they would buy in the future. This movement made landlords consider less traditional hotspots for property ownership as London took a dip and hotspots in the north came into their own and further fuelled the private rental sector.
We can’t ignore the holiday let sector as, with holiday restrictions, came the rise of the Great British staycation, spurring investors into this area. Many lenders responded by introducing new products and enhancing their lending criteria which has supported the creation of another boom area of the market.
There is much in the offing in respect of property standards in the rental sector and, therefore, many landlords have taken the opportunity to invest in their properties in respect of refurbishment and energy efficiency, such as the introduction of a new boiler, white goods or windows, for example. This comes ahead of the introduction of new rules - expected in 2025 – and such improvements will support their EPC ratings and further enhance their property’s value.
While rates remain low and market forces are high, in a limited housing market people are always going to want somewhere to live. Low supply and high demand drive the current market and ensure that landlords can achieve good rental yields, so I believe the strength in this market will continue through this year, growing a market that is now estimated to be well over £1.4 trillion.
There are still significant opportunities for continued growth in Scotland, the North West and East and some areas of the South and, on the whole, properties are growing in value. Mortgage rates, despite expected incremental rises throughout this year, continue to remain low, the demand for properties, as attested by estate agents, continues to be high, the economy is strong; it seems the only issue to factor in are the rising energy costs.
