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Steve Cox
Distribution Director Fleet Mortgages
2020 has been such a topsy-turvey year that I suspect many Buy-to-Let market stakeholders will be hoping for a relatively stable 2021 . The problem is , I ’ m not sure we ’ re going to get it .
Government intervention in any part of the property market tends to have a major influence and significant ramifications , and the decision to offer a stamp duty holiday has certainly played out in this way . Perhaps , even more so , given that landlords could access the holiday – a decision which still seems surprising but was perhaps meant to make up for the taxation and extra stamp duty charges that landlords have had to put up with over the last five years .
It certainly caught landlord ’ s attention and I suspect many brought forward purchases – where it was feasible to do so – to try and ensure they didn ’ t have to pay the full amount of stamp duty . That said , landlords are a sensible bunch and there will be those who were unwilling to purchase while house prices were rising , instead holding out to see whether the pricing and valuation might be more in their favour , particularly when the stamp duty holiday finishes .
When that might be , still remains in the balance . Calls for an extension to the current 31st March deadline are plentiful , with some looking for three / six / twelve months additional time , however what looks more likely is the Government opting for a process whereby any transactions ‘ within the system ‘ would be allowed to complete after the deadline and still secure the stamp duty saving .
Anything beyond this may well be deemed fanciful , and while it would certainly help the Buy-to-Let sector and give a further boost to landlords looking to add to portfolios , we might well have believed that all our Christmas ’ s had come early if the Government had agreed to it .
With that being said , as per every other part of the mortgage market , 2021 is likely to be split into two – pre- and post-deadline . However , whatever happens with that decision , and indeed how the market might react to that period coming to an end , the fundamentals of the private rental sector ( PRS ) and therefore the Buy-to-Let market remain incredibly solid .
We still have a real discrepancy between rental property supply and demand ; indeed , if lockdown has shown anything , it is that people may be more eager for certain types of properties in certain locales , potentially away from city centres . Landlords are already reshaping their portfolios to take advantage of these shifts .
That supply / demand dynamic also favours landlords and we ’ re seeing that in terms of rental yields in most areas of the country . Every quarter , Fleet Mortgages runs our own Rental Barometer and it was intriguing to see only two areas of England post a year-on-year drop in average rental yields for Q3 2020 compared to Q3 2019 . And these were only very minor drops . In all other regions , rental yield was up and it wouldn ’ t surprise me to see that replicated right across the UK when we review Q4 2020 figures .
Of course , landlords have needed to roll with the punches in terms of some tenants ‘ ability to pay rent during the pandemic , but with a vaccine now being given , we are hopefully moving onto the next post-pandemic phase and a return to normality . And , as the housing market has proved over the last six months , this is not necessarily stopping people from looking to move to areas and properties which are much more suitable for them .
As mentioned , landlords are likely to be keeping a firm eye on prices next year , not just post-stamp duty holiday , but also in relation to what might happen to unemployment / wages and consumer confidence . If we do see a temporary drop in some areas then I fully expect landlords to make their move , not forgetting the remortgage opportunities that should present themselves to advisers with landlord clients looking to access capital in order to grow portfolios .
Let ’ s not forget that landlords are in this business for the long-term and , with lenders like Fleet who have a very strong appetite to lend throughout 2021 , there should be plenty of product availability , flexible criteria , service excellence and therefore opportunity to grow your Buy-to- Let business . Make sure you contact Fleet to see how we can support this growth and your clients ’ Buy-to-Let mortgage needs .
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