Hope: let’s start with hope. Although it does seem a long way away, with the vaccine and a slowly-reducing infection rate, there are signs we will beat this virus and so thoughts will need to turn to rebuilding the economy, which in turn will rebuild careers and lives.
Reviving hospitality and retail will be vital, as despite the furlough scheme saving some jobs in these sectors, we’ve still seen 660,000 jobs lost in the hospitality sector in 2020, according to the sectors trade body, UK Hospitality.
Retail has seen 180,000 lost in 2020 with up to another 200,000 at risk in 2021 according to the Centre for Retail Research (CRR).
Escape to the country
The fact others have been able to work from home has meant many tenants have quit urban areas for a new life in the suburbs or the countryside.
This, along with job losses, has resulted in private rents in Britain’s cities falling by as much as 15% over the past year. And, what has been described by some as an “exodus” from the cities, sparked by the Covid-19 pandemic, is now pushing up rental costs in rural areas.
In October, average rents in the countryside were 5.5% higher than a year earlier, while typical city rents were down by almost exactly the same amount (5.3%), according to figures for Great Britain from the estate agents Hamptons International.
However, let’s not make this all about London and the big cities, as both Zoopla and the Royal Institution of Chartered Surveyors (RICS) have reported that rents outside of London were up by 1.7% annually and remain positive respectively.
Interestingly, though, Zoopla also said that most Londoners were looking for rental property within the city and the proportion of Londoners looking to stay in the city has actually risen compared with last year.
Uncertainty
Despite the pandemic, the above shows that general demand for quality rental properties remains and this can only be positive news as we start to exit this nightmare, plus once people start to be re-employed in hospitality, for example, then this demand will only increase.
It’s clear that landlords and the rental market in general will be vital to the recovery of our economy and go some way in helping to repair the economic damage to careers, lives and families, but I fear there are barriers still to overcome.
The much reported cladding issue must be resolved and quickly, as not only has it affected landlords and their ability to either rent or sell the properties they have, but it has also effected many first time buyers who are now unable to move.
I know that the RICS is reviewing the EWS process, but greater support from the government is needed whether that be funding up-front for leaseholders to get their work completed, more incentives to train and educate more workers to enable the work to be carried out or some form of process to obtain the labour and materials required.
There is also the prospect of changes in Capital Gains Tax which will affect property investors disproportionately and just the uncertainty of this looming may force some landlords out of the market.
Opportunities
On the flip side, overseas property buyers are still seeking opportunities to buy in the UK, owing to potential savings caused by the pandemic and a topic that I’ve avoided until now, Brexit.
Many investors are from the Middle East, Hong Kong and South Africa and for overseas investors, Brexit actually presents potential for savings, as currency exchange rates fluctuate.
Also, Covid is providing opportunities such as discounted deals and so suddenly 2021 could be shaping up to be a big year, especially as interest rates remain at the historic low of 0.1% which is also favourable for overseas investors.
Important to an economic recovery is a healthy rental market with landlords willing to retain and improve the quality of their stock, along with some expanding their portfolios whether they are UK or overseas based.
Call me an optimist, but here’s to a much better year for all those involved in the buy to let sector and feel free to contact us on 01908 465100 or visit our website. https://visionaryfinance.co.uk/
Hiten Ganatra is managing director of Visionary Finance
