The challenges presented by the Covid-19 pandemic have been unprecedented. Yet low volatility in the housing sector has been enabled through a range of favourable discretionary government interventions. These policy tools have stabilised the market in the short term as well as in the medium to long term with help to buy and ongoing low-interest-rate levels boosting access to capital. A key segment of the market undergoing rapid acceleration is the Buy-to-Let space, reversing five years of sluggish price growth and activity.
The latest report by Paragon Bank on a survey of UK mortgage brokers finds that nearly half (41 per cent) expect their BTL business to increase over the next year, and over a quarter (28 per cent) expect BTL mortgage demand to remain stable. This is a shift in market sentiment from 2018-19 when the bank’s insights revealed widespread pessimism wherein three times more landlords planned to sell, rather than expand their portfolios.
Landlords are returning to the market, capitalising on the innate pragmatism the UK government has demonstrated through schemes such as the Stamp Duty Land Tax Holiday.
UK property is widely perceived as a stable long-term asset, particularly in times of uncertainty. The Private Rented Sector (PRS) houses over a fifth of the population according to 2018 figures, over 4.7 million households. This figure has doubled since 2002, whilst house prices have nearly tripled in the last two decades.
Key trends underpinning this upwards momentum include the more than eight million individuals that live alone as of 2018, who are more likely to rent, as well as a higher number of people in higher education. A significant portion of the graduate market rents whilst saving for a deposit to buy for greater flexibility.
Given the potency of this regulatory climate reversal and the irrepressible nature of long-run demographic and social patterns, it comes as no surprise that savvy BTL investors with a long term focus are actively accessing buying opportunities.
More than two-thirds of mortgage brokers expect UK buy-to-let business to be either stable or growing over the next 12 months. What makes the sector so resilient to adversity? The latest research published by Paragon Bank shows a continued optimism among professionals within the buy-to-let industry. Despite the impact of coronavirus on the global economy, the results show that appetite within UK buy-to-let is still high.