Yesterday, 23 March 2021, marked the anniversary of the UK’s first Covid-19 lockdown.

Despite health experts warning of a new and rapidly spreading threat, few would have imagined that the number of UK deaths linked to the virus would swell from the 335 recorded a year ago to 126,172, according to the latest figures.

The pandemic has forced us to adapt many aspects of our lives and as a result, the private rented sector (PRS) is quite different today compared to a year ago.

With lockdown all but bringing the industry to a halt, many lenders withdrew from the market completely and those that remained did so with significantly reduced product offerings, particularly amongst higher loan-to-value mortgages, and tighter criteria.

Moneyfacts recently reported that there are now 3,532 mortgage deals available, the highest amount across the market since March 2020 when that number stood at 5,222.

This is a reflection of the demand that we have seen as markets have rebounded strongly.

Successive lockdowns have provided us with a once-in-a-generation chance to reassess where and how we live. Working from home has made living close to our workplaces less important, while placing a premium on properties with home office space.

Location shift

Demand has also been boosted by movers now prioritising gardens and access to green space, reminded of the importance of our homes and surrounding environments by the necessity to spend more time in them.

This has led to shifts in the desirability of some locations, a trend most pronounced in London and coastal areas. For example, Cornwall has overtaken the capital as the most searched for location on Rightmove.

This will come as little surprise to many in the property sector as we have for some time been aware of the two-speed market that emerged as the strong demand that was being seen around much of the UK was not evident in London.

This has made rental property in some boroughs more affordable and, with a plan detailing how we will soon see a return of all of the things that make London living appealing to so many, people are being tempted back.

Student accommodation

Like London, the student market was negatively impacted but has bounced back. Last year, with the future of on-campus study unclear, revenue from student lets dropped by 30%, according to analysis by Goodlord.

This has now been reversed and we have heard anecdotes that the pandemic has actually led to an increase in students opting for the more homely accommodation managed by landlords in favour of purpose built developments, where the large number of residents and communal nature could make social distancing more difficult.

Holiday let

Similarly, the holiday let market has been both bruised and then boosted by Coronavirus.

At the start of the pandemic, the limiting of non-essential domestic and international travel left holiday lets empty. Restrictions were eased in a bid to rejuvenate the tourism and hospitality industries but with but destinations being added and removed from the list of travel corridors every week, the risk and extra effort associated with overseas travel left many taking the safer and easier option of a holiday on home soil.

The rise in popularity of ‘staycations’ that we saw last year looks set to continue with a UK government adviser said it is “extremely unlikely” that Britons will be taking foreign holidays this summer amidst rising cases across Europe that have force France and Poland to implement partial lockdowns last week.

Stamp duty holiday

Meeting this demand has been helped by a financial incentive in the form of the stamp duty holiday, a key driver behind Q4 2020 seeing levels of lending for buy-to-let property purchase not posted since 2016.

The announcement of the tapered end to the tax break, made as part of the budget earlier this month, means that the substantial pipeline will stand up.

Furthermore, Paragon research has found that the extension may generate additional business, with just over four in 10 landlords surveyed saying that they are likely to look to purchase another property to grow their business.

The Stamp Duty extension is also said to be behind an influx of new investors who have entered the sector in the past year. A Hampton’s survey found that in 2020 the proportion of buy-to-let purchases financed with cash hit the lowest level since the survey began eight years ago and attributed this to small and first-time landlords financing purchases with mortgage borrowing.

This, along with the stability of the PRS throughout the pandemic, represents a sound option for those that have saved during lockdown.

Whether these smaller-scale operators will grow their lettings businesses remains to be seen, but we know that those landlords who have been around for some time have responded well to the twists and turns of the past year, they’ve experienced shocks before and know that people will always needs good quality housing.

Coronavirus has left a huge hole in the UK’s economy, so any substantial investment in social housing looks unlikely in the short-term. With the crisis highlighting how important a stable and affordable home is, the place of the PRS in responding to the UK’s housing shortage is as important as ever.

Richard Rowntree is managing director for mortgages at Paragon Bank