Nevertheless, as with the property market as a whole, demand for BTL investment opportunities has remained high. For instance, the National Residential Landlord Association’s quarterly Landlord Confidence Index shows that there were increased levels of confidence among landlords in both Q4 2020 and Q1 2021.
Further, a survey in May 2021 by The Deposit Protection Service found that 34 per cent of UK landlords had either purchased another buy-to-let property in the past year or intended to buy one within the coming nine months.
The aforementioned price growth has been a critical factor in attracting more investors into the BTL market, as well as encouraging existing BTL landlords to either maintain or grow their portfolios.
This price growth has been supported by improved rental returns of late – the HomeLet Rental Index shows that in May 2021 the average rental price for a new tenancy in the UK was £997 per calendar month, which is a 4 per cent year-on-year increase.
The property market marches on
Peter Wilding, the founder and director of the British Influence think tank, is credited with coining the term Brexit in 2012. Since the approach of the referendum 2016, the word has seldom strayed from the media spotlight.
Positively, though, the fallout from the Brexit vote – and indeed the formal implementation of Brexit itself – has not adversely affected the property market over the past five years. Data demonstrates that prices continue to march upwards, and demand for residential real estate remains high.
That is not to say the market is unchanged, however. It certainly looks different today than it did in June 2016. But importantly, this is more the result of the aforementioned reforms to the BTL sector, coupled with the more recent changes in homebuyers’ preferences and priorities, which have been affected by the Covid-19 pandemic.
It will be fascinating to see how the market evolves from here.
As we emerge from the pandemic and the realities of Brexit become better known, investment flows are likely to change and we may also see different segments of the property market – the commercial sector, for instance, or residential real estate in rural areas – expand or contract at markedly different rates.
Nothing can be taken for granted; the state of the market must be constantly assessed and reassessed.
Paresh Raja is the founder and chief executive of Market Financial Solutions (MFS)