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Why now could be the right time for your clients to become landlords

11th November 2020

The events of 2020 have affected every corner of society – including investors.

But despite turbulent markets and the nervousness caused by the UK entering its first recession in 11 years, house prices have risen and many more people are considering taking their first steps to becoming a landlord.

In fact, it’s been reported that[i] searches for first-time buyer, first-time landlord and non-owner occupier had risen by 18 per cent since the start of September.

There are three main reasons why:

Government support

As part of the government’s response to the outbreak of Covid-19, Chancellor Rishi Sunak launched a number of schemes aimed at supporting the housing market.

The most significant for property investors was to reduce stamp duty.

Until March 2021, investors will pay less tax on any property they buy and those buying rental properties for less than £500,000 will now pay only 3%. However, your clients must be quick! The clock is ticking and March 2021 will soon be upon us. Buyers need to act now and brokers need to ensure now more than ever, that your client’s applications are well packaged to avoid unnecessary delays.

Market opportunities

Before investing in a buy to let, would-be landlords obviously need to look at the strength of the rental market in the area they’re hoping to buy.

According to recent industry figures, tenant demand has increased significantly[ii] since the start of the year and has risen particularly quickly since the outbreak of Coronavirus.

Although the government has also strengthened its support for renters through the provisions of the Coronavirus Act 2020, any interruptions in rental payments should be short term. In the longer term, high demand usually leads to shorter void periods between lets, and increased rents[iii].

Another area of rising demand is holiday lets. With international travel curtailed, the trend towards taking more “staycation” holidays in the UK has accelerated this year[iv].

Mortgage products

Those looking to invest in property have a wide range of attractive mortgage products to choose from.

At Leek United, for example, we have a number of products for all types of landlords, whether you are looking to take your first steps into buy to lets or are looking to extend your portfolio.

We accept applications from first-time landlords and ask for an income of just £20,000 or more. This can be a single or joint income.

While most are, investors don’t need to be homeowners themselves, meaning that those who are not on the property ladder already could make their first purchase a buy to let.

Meanwhile, Leek United accept family-gifted deposits or equity, while let to buy mortgages can also be helpful to those who may have inherited a more suitable property, for example, and now want to rent out their existing home.

For regulated buy to lets - we calculate on market rental value rather than the amount the family member is currently paying and look at affordability for your client.

Whatever the motivations and circumstances, buying any type of property is a big decision with long-term financial implications. Making sure your clients are well-informed about their options could help them make the most of whatever opportunities they face.

To speak to our dedicated intermediary team, call 0808 281 9309.


[i] https://www.ftadviser.com/mortgages/2020/09/22/rise-in-first-time-buyers-searching-for-buy-to-let-properties/

[ii] https://www.buyassociation.co.uk/2020/09/01/good-time-to-be-a-landlord-as-record-number-of-tenants-seek-rental-homes/

[iii]  https://www.abcmoney.co.uk/2020/09/23/why-now-is-a-good-time-to-expand-your-buy-to-let-portfolio/

[iv] https://www.telegraph.co.uk/business/2020/08/29/wave-staycations-helping-turn-tide-coastal-resorts/

 

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