Buy-to-let investment activity is experiencing positive growth in the UK property market in the last three months, as demand for rental homes is gradually rising. August saw a substantial uptick in prospective tenants in the UK property market with data from global real consultant Knight Frank showing a 10-year record for viewings in August in London and the Home Counties.
This follows a record-breaking July wherein the average letting agent branch registered 97 new tenants, compared to 79 on average in June, according to the ARLA Propertymark July Private Rented Sector (PRS) report. Further, the number of rental properties available in July rose to an average of 208 properties managed per letting agent branch.
These record-breaking supply and demand levels in the housing sector are emboldening BTL (buy-to-let) investors, who are currently benefiting from several options and opportunities in the market. From a credit perspective, specialist lenders such as VIDA are active in the market with products available up to 85 per cent LTV. Such lenders have been encouraged by demand levels, as well as government reforms protecting downside risk.
Bank of England figures for July indicate that new mortgages jumped 66.2 per cent from 39,900 approvals in June up to 66,300 residential property purchase approvals in July. This is seven times higher than the 9,300 approvals post-lockdown in May. Nearly a quarter of investors plan to purchase one or more properties to take advantage of the Stamp Duty Land Tax holiday, according to research from FJP investment.
The HomeLet rental index shows that the average rent for the UK in August has now reached £985, a 2.1 per cent increase since July, and 1.5 per cent growth since the start of the year. On a monthly basis, rents saw the biggest increase in the South East (3.5 per cent), followed by London and the South West (both 2.6 per cent). This momentum is a key driver underpinning growing BTL investor sentiment & activity in the market.
"Our latest figures show the rental market still continues to gather momentum following the reopening of the housing market in May. We have seen a record-breaking level of rental stock, and demand from tenants continues to grow, providing a positive outlook for the future of the private rented sector," says, Phil Keddie, President, ARLA Propertymark.