Despite the obvious pressure on the rental market resulting from the current health emergency, longer-term, buy-to-let remains an attractive asset class, says Ringley Group MD Mary-Anne Bowring.
Quoted in today’s issue of Landlord Today online, Mary-Anne says: “A subdued for-sale market will likely see demand for rental homes grow over the course of the year, as buyers put off committing to purchasing a new home and sellers hold off owing to a dip in values and the impracticalities of trying to sell when social distancing measures are in place”. Her comments are in response to the latest figures from Zoopla, showing demand for rental homes up by 30% in the first half of this month.
However, as Landlord Today points out, the increase is coming from a very low base with demand falling dramatically by 57% as the country went into lockdown at the end of March. The improvement is likely to be because more people are staying at home, so anyone who is finding their current property unsuitable may find they have more time on their hands to plan for the future and think about moving once the lockdown is lifted.
Putting the figures into context, Mary-Anne says, “The latest BPF figures show strong growth for build-to-rent in key regional cities which is positive news but completed BTR homes still make up only a tiny fraction of the overall rental market.
“More worrying is the slowdown in activity in London, where demand and need for high quality rental housing is arguably greatest, with investors put off by potentially hostile policies such as rent controls.”
According to Zoopla, the Coronavirus outbreak may be impacting demand but it is having little effect on supply. The total number of homes available to rent remains broadly unchanged. There has been no large-scale withdrawal of homes listed to let since the start of the lockdown and rental listings are down just 3% compared to figures from 1 March.
In contrast, the rate of new rental listings coming to the market has slowed, after a surge in homes to rent before the lockdown, as landlords in some cities moved short-let homes to the long-let market.
And with annual UK rental growth at 2.4%, up from 1.5% in March 2019, Zoopla expects rental growth for the rest of the year to remain moderately positive for landlords.
Read yesterday’s blog for more on the Build to Rent market.
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