As we start to go through the various phases to exit lockdown across many areas of the globe, there have been many theories about what effect twelve months of the pandemic will have on the decade to follow.
Analysts have been making comparisons between the impact of COVID-19 and the Spanish flu epidemic that ended in 1920 and sparked a decade of economic and cultural change.
Personally, I think the effect may be overstated, but in the housing market it is clear we are already seeing trends to indicate that people are taking opportunities to live where they want to live and maybe moving away from immediate convenience and/or near their place of employment.
According to recent research from Hamptons estate agents, a growing number of people are seeking out rental properties outside of city centres, pushing rents in these areas higher – with rents outside the capital soaring by 8% in the past 12 months.
This rise in rents of newly let property outside the capital is the highest since Hamptons estate agents started its index in 2012. Meanwhile, rents grew in Outer London by 5.3% and in the South East by 10.6%, as tenants sought out more rural areas and working from home space.
The pandemic is continuing to polarise demand for property, with houses now selling three weeks faster than flats according to Zoopla. The lockdown-led ‘search for space’ means houses are taking an average of 42 days to go from the point of listing to sale agreed; this compares to 62 days for a flat. Demand for three-bed homes jumped by 30% in the week after the Budget; these family homes are still the most coveted type of property across the UK.
In addition, it also appears Brexit hasn’t deterred investment in the UK property market.
According to the most recent data by Ludlowthompson, the figure stands at a five-year high of 184,000 – marking an increase of 19% over five years, when there were 154,000 overseas landlords.
This suggests that many overseas investors have capitalised on the drop in the value of Sterling between the EU referendum and the Brexit deal to add to their portfolios. Favourable exchange rates mean that foreign buyers are able to get more for their money, opening the market up to a wider pool of investors.
As always, there is a cloud on the horizon, as it is estimated that 840,000 private tenants have fallen behind on their rent in the past year, according to research carried out by The National Residential Landlords Association (NRLA). The landlord body warned that without this support there would be a wave of repossessions by unpaid landlords once eviction protection measures began to end in June.
With the backlog in cases that will be seen in the courts, evicting non-paying tenants may be much harder in practice and so for some a solution in England could be introducing what Scotland and Wales have done, as they now provide interest-free Tenant Hardship Loans to help renters pay off arrears built up in lockdown.
It remains to be seen if the Roaring Twenties 2.0 is on the horizon for the UK housing market, although with 95% LTV mortgages returning, improved mortgage options for the self-employed and more and more new products and lenders launching in the Buy to Let space, I’m not predicting any sign of the market cooling any time soon.
