Whilst Theresa May’s Brexit negotiations continue to flood the tabloids, we can be forgiven for being a little unsure as to what the UK property market is going to bring in the next year, particularly for the buy-to-let (BTL) market.
With many sources suggesting that less migration from Europe will mean less demand for rental housing in the UK, the fact is that there is an ongoing shortage in housing supply for the current demand. Couple this with high house prices and tough mortgage criteria and investors will be pleased to hear that the number of Britons choosing to rent will only rise, moving forward.
The number of British tenants choosing to rent as opposed to buying their own home continues to rise, as many tenants enjoy the flexibility that renting offers. University postgraduates, for example, tend to continue renting once their studies have completed, as few wish to carry the financial responsibility of a mortgage so early on in their careers.
With such high demand for rental properties increasingly apparent, we are confident that the rental market will remain strong, despite the government’s movements to slow down the private buy-to-let market with increased taxation, stricter lending and increased regulation. Figures from the Bank of England have shown that while an increase in new residential mortgage lending activity occurred in the first half of 2017, the share of buy-to-let lending decreased to 12.5% in June 2017, which was the lowest percentage since Q3 of 2013.
It appears the government’s strategy is working. A significant number of individual landlords and investors quit the BTL market last year, thanks to higher stamp duty costs and the phasing out of mortgage tax relief. Again in 2017, estate agents reported an increase in landlords selling properties across their branches.* The good news? With some landlords deciding to move away from the rental market, demand for remaining properties has fiercely increased, meaning many landlords are experiencing additional interest in their properties and, in some cases, demanding slightly higher rents.
We believe the government is misguided, pushing landlords despite the fact that they provide much-needed affordable rental accommodation across our towns and cities. What is clear, though, is the property market is shifting and for those investors and landlords with larger portfolios, it is easier to ride the storm and absorb tax changes.
Recent research conducted by Property Wire and HMRC have found the majority of property professionals investing in the UK are looking to expand their portfolios in 2019, remaining focused and determined despite a backdrop of uncertainty and squeeze on affordability.
Ultimately, it is not Brexit that is posing the biggest risk to the rental market, but government intervention, so landlords and tenants alike ought to stay up-to-date on progress within the property market as a whole. However, with landlords benefiting from mortgage rates still nearing an all-time low and tenant incentives such as Leaders’ ‘No Deposit Option’ helping more tenants get in on the rental market, there continues to be plenty of room for landlords and tenants alike, regardless of ongoing Brexit negotiations.
Want more advice on what Brexit means for the rental market? Contact your local Leaders branch today.
*According to ARLA Propertymark