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To say that Covid-19 has changed the UK property market would be an understatement. While the economy faced turmoil, which later saw the onset of yet another recession, the property market was booming.
Following the temporary closure of both the construction industry and the property market during 2020, a flurry of pent-up demand was unveiled when the market reopened. This only served to widen the gap between demand and available supply across the country – a major factor in driving property prices to new levels.
We already know that property prices are at an all-time high as a result of the pandemic, but how has Covid-19 changed Buy-to-Let processes? SevenCapital, a leading UK developer, explores some of the ways in which the Buy-to-Let market has been affected:
One of many ripple effects of Covid-19, the changes we have seen in tenant demand have transformed the Buy-to-Let market. Although apartments in city-centre locations have always been popular with tenants, the shifts we have seen over the past 15 months have seen unexpected locations rank more highly within the rental market.
A shift in lifestyle is at the root of this, with the pandemic making remote working the ‘norm’ for a lot of workers. And while the UK continues on a roadmap out of lockdown, these working conditions will likely remain the same for much of society for some time. Although it’s very early to predict the scale of remote working, more tenants and homeowners are continuing to realign their living situation with these new priorities.
So, what exactly are tenants looking for in 2021 and beyond?
Connectivity. For those moving out of the capital, connectivity will be increasingly important, especially if they plan on splitting their days between home-working and the office. While London leavers once capped their property searches to a 25 miles radius around the capital, more recent research has found that this has increased to 40 miles. With this wider radius, Buy-to-Let investors now have more opportunities to enter the market with more affordable prices along the London Commuter Belt.
The search for space was – and still is – a key driver behind this relocation trend, with the majority of tenants now prioritising the number of bedrooms within a property. Between 85% and 91% of tenants aged 18-44 rank this as a priority when looking for a new property, while location follows closely behind, giving Buy-to-Let investors an idea of what to look for when building a property portfolio.
Supply & Demand
We know that demand is soaring, with a lack of supply playing a significant part. In March 2021, the supply of properties listed for sale in England and Wales was a quarter lower than the previous year, which has continued to spiral. Since then, the flow of new properties entering the market has dropped 2% last year, despite the demand for homes being 29% higher.
Fuelled by the Stamp Duty holiday, this storm of supply vs demand has made for increasingly competitive property prices, with houses seemingly being prime real estate for prospective homebuyers.
Reinforcing both the shifts in tenant demand and an undersupply of property across the UK, data from OnTheMarket has found 33% less houses on the market than in previous years due to the amount of buyers looking for more space.
While just 3% of listings were removed from the London market because of successful transactions, the South-West had 42% of their listings removed as people moved to more rural areas.
Although the effects of Covid-19 continue to subside across the UK, the increasing permanency of certain working requirements, combined with a lag in supply, could see these trends remain prominent throughout the industry indefinitely. As a result, Buy-to-Let landlords have significantly more markets and property types to consider.
Digitalisation of Processes
In comparison to other industries, the pre-Covid-19 property market wasn’t the most technologically advanced to say the least. Whether you were looking to rent a property or purchase one, the majority of processes involved were carried out in person, from viewings, to contract signings and subsequent property checks.
However, as national lockdowns restricted any and all social contact, the property market faced many challenges. From virtual viewings to digital contracts, the industry has diversified beyond measure in order to meet the rising demand for property.
Not only have these advancements contributed to the continued success of the UK market, but it has also highlighted the versatility of the industry as a whole. Despite the gradual easing of restrictions, this digital shift will continue streamlining the process of both renting and buying property, especially for overseas Buy-to-Let investors.
The global pandemic has affected every inch of society and has had undeniable impacts on the property market – both good and bad. With a plethora of new tenant demands, rising UK hotspots and an increasingly digital process across the board, the Buy-to-Let market continues to emerge from the pandemic in a completely different state. Nonetheless, the combination of these factors has made the process more accessible, with more markets and property types to consider and more access for Buy-to-Let landlords to enter these.