Buy-to-Let: back for 2021?
Mon 11 Jan 2021
Paul Bennett, Director
Welcome to 2021 and although we start a new year with tighter restrictions, our spirits are lifted as the vaccination programme gathers real pace. As an industry, we have been allowed to stay open in order to facilitate home moves, and the Behr & Butchoff team is also working at speed to get incumbent transactions completed before the 31st March 2021 stamp duty deadline.
Beyond that, we’ll continue to organise viewings, valuations and property visits while adhering to the official Government guidelines. Of course, PPE, social distancing and everyone’s wellbeing will be at the forefront of everything we do.
Another area forecast for a quickening of activity is the buy-to-let market. There are many factors that will affect this sector, with some having a more pronounced impact here in London. A report by The Buy Association concluded that the rental market will grow in 2021, with a nod to a hopeful return to office life and tenants looking for new rentals in search of more space - both inside and out.
In the more immediate future, we expect continuing demand for investment properties from overseas buyers. Of note is the 31st January 2021, when a special visa will be available to British National Overseas passport holders in Hong Kong. This will open up a new route to citizenship here in the UK, with an associated demand for residential property in the capital. In fact, all international investors will keep their eyes firmly fixed on the UK, as they know a weak pound will offset the 3% stamp duty surcharge that is due from 1st April 2021.
Looking more long term in 2021, buy-to-let property could be a wise solution for dejected savers and for the newly flush who find money is metaphorically burning a hole in their pocket. Limited opportunities to socialize and travel are thought to be behind figures published by the Bank of England that reveal a record £215.3 billion was sitting in instant access accounts that paid zero interest at the end of October 2020.
Contrast this with the UK’s average rental yield, which hovers at 3.53% according to SevenCapital, and the prospect of a negative interest rate that could force savers to actually pay banks for the pleasure of holding their money, and investing in property makes perfect sense.
Of course, there is talk of a tax raid later this year and details may come in the Spring Budget, scheduled for 3rd March. While a change to Capital Gains Tax is rumoured, balancing the books may see savings and pensions plundered in order to fill the black hole left by Covid-19 lending.
We are already hearing of individuals redistributing their assets and switching to property for both short- and long-term prospects. We would be delighted to help anyone wishing to follow this investment strategy, and our advice will also be tailored for those seeking to adapt in light of any new or altered property taxes.
Please do get in touch by telephone or email in the first instance, whether you want to buy, sell, rent or invest in a London property.