Is it the time to invest in UK property ? Does the Stamp Duty Holiday influence the buying power? Why is there a rise in rents in the UK? Which areas, in the UK, enjoy high rental yield? How about the buy-to-let mortgage rates?

Let’s take a look at the situation in property market in the UK now.

STAMP DUTY HOLIDAY for home buyers

With the government incentive, the Stamp Duty Holiday, some home buyers do not need to pay stamp duty for some properties. This have increased the demands for properties. Transaction levels in the first three months of 2021 were 51% higher than the previous year, and higher than any quarter since 2005. The incentive was a ‘good financial opportunity’ for the landlords to expand their portfolios.

Although the Stamp Duty Holiday has ended now, home buyers (67%) are still confident about the future of the property market. Mortgage brokers are also confident with 71% saying that home buyers are more likely to expand their portfolio in 2021.

And here are top five priorities for landlords looking for their next buy-to-let properties, driven by tenants’ current preferences.

INCREASE IN RENTAL DEMANDS

Some reasons why people choose to rent:

  • House prices continue to rise

  • Renting is more affordable than buying a house

  • More flexible lifestyle - less responsibility

  • Renting allows people to live in a better location compared to if they bought

  • The rental stock improves in quality

RENTAL YIELD

There is a rise in rent prices as demands for renting have increased. Rents have increased by 1.6% yearly across the UK and more than 2% in areas such as the South West, East Midlands.

As of December 2020, although London is still the most expensive place to rent across the UK, it also has the lowest rental yields for landlords. This is due of the high up-front cost of buying properties in England’s capital.

Buying properties, in areas with lower property prices, are more likely to experience significant growth in property values and thus, enjoy higher rental yields. The chart below shows how rental yields vary around the UK. The UK average is 4.3%.

INTERNATIONAL BUYERS & TENANTS on the rise

According to Knight Frank, the international buyers and tenants searching for UK property has reached its highest level since before the Covid-19 pandemic. In August 2021, of all web users looking at sales and lettings property, near a quarter (24%) of them were located overseas (the highest figure since January 2020). In fact, it was more than those located in the UK for the first time since 2020.

Overseas students and returning corporate tenants have driven the demand for the lettings property. French nationals were the largest international buyers in prime central London in 2020 due to the restrictions.

BUY-TO-LET MORTGAGE at lower rates

After the crash, of the availability of buy-to-let mortgage in 2020, the market has settled down. And the resulting lower rates are good news for landlords looking to buy or refinance.

Data from Moneyfacts shows that average buy-to-let mortgage rates have been falling for months, and are now just above the levels seen before the pandemic.

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