2020 saw landlords fall victim to empty properties and reduced rents in a bid to cling onto the remaining city dwellers. But fast forward 18 months post-pandemic and according to data from Benham and Reeves lettings agency, the tide is turning on the London rental market, as renters look to return to urban life.
Twenty-five years strong
Autumn 1996 saw the first buy-to-let mortgage launch in the UK, and The Times states that there are now over 3,000 buy-to-let mortgage products currently on the market. Accessible to all, it quickly became a profitable income stream for many who’d never thought of landlording, meeting tenant demand and fulfilling a need for homes in a recession-hit housing market.
Twenty five years on, and signs show that the demand is there in unprecedented droves, as we witness a post-lockdown rental boom of soaring rents and even gazumping tenants, meaning that the earnings of London's buy-to-let investors are set to surge. So, as the investors rush back into the South to capitalise on London’s rental boom bounce-back, could there be too many similarities to the market twenty-five years ago, to ignore the signs that now may be the right time to join them?
Cashing in on the urban revival
With lots of international students deferring university places last Autumn, many are now keen to come back to London to get the full student experience. Many of these have been late decisions, resulting in an influx of demand for rental properties especially in university hotspots.
Overseas and wider UK professionals are also relocating here once more, coupled with the reversal of the working from home trend. With more than half of companies in the capital now operating a ‘hybrid’ system when it comes to work, staff are now expected to appear back at their inner city desks.
With a shortage of high-quality rental accommodation, and the masses keen to get themselves settled in something close to their workplace, rents have crept up to pre-pandemic levels, and these growing shortages of stock are putting London landlords in the strongest position they have been in for some time.
Estate agents report that in some parts of London, the rush to rent properties is so great that they have witnessed the return of gazumping, as tenants outbid each other to get the rental properties they want. This situation is rarely ever seen in the rental market, and better associated with homebuyers, illustrating the stretch renters will go to snap something up.
Clearly, there couldn’t be a more different situation to the difficult market we witnessed in 2020. And, as the economy continues to strengthen, landlords are now feeling more confident in their ability to boost their rental income.
Do you have your eye on a buy-to-let mortgage?
If you are interested in purchasing a buy-to-let property or letting an existing London property you own, then why not talk to Tony to determine your rental income potential versus your mortgage outgoings?
Your home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it.
Our range of processing and administration fees, payable on application, should you ask us to arrange your residential or buy-to-let mortgage is £395. If the mortgage does not go ahead a refund of £200 will be made.
The Financial Conduct Authority does not regulate some forms of Buy-to-Let.