Fri 27 Nov 2020
Paul Bennett, Director
As we draw a line under 2020, property investors may be weighing up their next move. In this blog, Behr & Butchoff provides a snapshot of the market for London landlords, giving focus for the New Year ahead.
Intent to invest grows
Property remains a resilient investment and while there are sometimes patches of turbulence, the returns often outperform stocks, shares and traditional pensions. Now, the glimmer of light at the end of the pandemic tunnel is influencing investment strategies. Landlords have displayed growing confidence in the current buy-to-let sector, with 10% of landlords questioned in Q3 of 2020 planning to expand their portfolios with a new purchase, claims the Mistoria Group. As a comparison, this compares to just 3% at the end of 2019. The big question is, ‘are people still in love with London?’.
The pandemic has altered the priorities of some private renters in the city. According to Londonlovesproperty.com, 39% of the capital’s tenants are looking to rent or purchase a property in a neighbourhood with a strong community feel, with a 28% rise in people searching for property closer to green, open spaces.
In addition, results of a study by PwC published in October 2020 showed around a third of over 45 year olds who currently live in London said they expect to relocate to a different region outside of Greater London the next time they move. The byproduct? A surge in Home County enquiries, with towns and villages in Surrey and Kent all experiencing uplift in demand.
Not everyone, however, is leaving London and it appears that forming bubbles is on the minds of many. In late October 2020, the London-based co-living operator, Built Asset Management, revealed it had experienced a 192% increase in under 24s taking out leases on co-living accommodation between the 1st and 30th September 2020, with 62% of those signing up coming to the party as first-time renters. PwC’s report also revealed that 73% of Londoners questioned in the 25 to 44 age bracket were planning to remain in the capital.
Landlords: leave London to invest elsewhere?
Chasing yields has always been a good business strategy but many London investors have kept faith with the capital due to price appreciation. This, however, may be changing for some. Figures also from the Mistoria Group revealed a 36% year-on-year growth in landlords looking to expand their property portfolios with the purchase of spacious buy-to-let properties in the North West, particularly in Manchester, Salford, Bolton and Liverpool. With low purchase prices and attractive monthly income, we can see why the heads of investors’ are being turned.
London prices set to rise
But is now the right time to look North? Multiple house price forecasts indicate property prices in London will rise anywhere between 12% and 25% over the next three years, which is great news for investors hoping for long-term gains.
Right now, there is also a very narrow - but possible - window of opportunity to complete on a buy-to-let purchase in London and make a £15,000 stamp duty saving. To take advantage of the stamp duty holiday, transactions must conclude before 1st April 2021, and Behr & Butchoff would be delighted to assist property investors hoping to buy within the deadline.
Our expert lettings team is available to help all landlords – whether they wish to dispose of their London assets, make a first-time investment in the capital or grow their portfolio in the city. Contact us for advice and London insights.