Making assumptions about the housing and mortgage markets, and what borrowers are most likely to do, seems to be a full-time job for some of those who cast a critical eye over the sector.
Even since writing this article, something could have changed that has a knock-on effect to the industry — in a positive way or otherwise.
The truth of the matter is that while we might like to predict and look into our crystal balls to see what might happen next, most of the time it is incredibly difficult to determine the short-term impacts, let alone what might happen further into the future.
Take the Covid-19 pandemic and its impact and influence on the UK housing market.
We can undoubtedly determine that change is happening as a result of it in areas like transaction levels, house prices — nationally and within certain regions and towns — and lending activity, but it’s almost impossible to say just what course they will all take and how the market will ‘land’.
With major parts of the economy having been shut down and the housing market only recently having been ‘opened’, it has been rather strange times.
- It is currently a very changeable situation regarding Covid-19 and the housing market
- Landlords and tenants are not immune from the changes
- Landlords who use a limited company have been less in need of a payment deferral
And that’s without looking at how the housing market will work in future — the impact on viewings, the need for PPE, consumer confidence, and dealing with legals.
Landlord participants and borrowers are clearly not immune from any of this.
Far from it, and there has been a lot of speculation about how the private rental sector would react to Covid-19, how large numbers of tenants might be coping with paying rent, how this would impact on landlords, their ability to pay their mortgages, and how the sector would be affected in areas like houses of multiple occupation, which might rely on non-family members/groups living together.
It is a complicated picture and there are no simple answers, especially for landlords who may be trying to weigh up their ability to keep supporting their tenants who are having difficulties with continuing to pay the mortgage and ensuring that they can continue to be active in this space.
There has been a vast amount of press comment on mortgage payment ‘holidays’, but it is clear that for many people this was a saving grace.
Just over three months into the provision of these ‘holidays’, we conducted an extensive analysis of our own mortgage book and the take-up of mortgage payment deferrals, and it has been incredibly informative in terms of seeing where the potential stress points might be for landlord borrowers.
Overall, we found that our buy-to-let borrowers were far less likely to ask for a deferral than their residential counterparts.
There will be a number of different reasons for this, and these decisions, how they work through the system and what happens post-deferral, will reshape the future of buy-to-let market.
Over recent years we have seen the professionalisation of the sector with far fewer ‘dinner party landlords’ now active, and we believe the fact that landlords are more likely to have coped during this period is because of the way they invest, the way they operate their portfolios and the money they have been able to put away in order to cope with, what is essentially, a ‘rental void’.