What is the UK Rental Market like in 2021?
Despite the recent announcement of a third national lockdown, it’s expected that the property market will remain open, much like it did in November 2020.
Unlike the original lockdown just under a year ago, estate agents, letting agents and tradespeople are permitted to keep operating in people’s homes, supporting the huge amount of transactions occurring before the end of the stamp duty holiday deadline on March 31st.
This will go some way to help meet the rising demand across the market. Both property prices and rental prices have been steadily rising since August 2020, with the majority of forecasts suggesting a slowdown in growth before it accelerates again in 2021.
For those keeping an eye on the market however, this won’t come as a shock. Demand has been outstripping supply for some time in regional cores up and down the country. There are nearly 1.7 million more people renting then there were in 2010 and that number keeps growing.
According to JLL’s forecast, the average UK rental price is expected to rise by 9.5% over the next four years, with six million transactions over the same time period. Within their forecast, Birmingham is highlighted as the leading UK city for growth and will outperform other alternatives such as Manchester.
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In the 2020 Buy-to-Let Investment guide you will find:
‘The Death of City Living?’
One of the key Buy-to-Let trends highlighted throughout the pandemic has been the shift in tenant priorities. Increasingly we’re seeing people look for more spacious properties in areas with higher levels of green space in what has been described as the ‘death of city living’.
In reality, we’re likely seeing a short-term trend that has been exacerbated by lockdown. With people confined to their four walls for the majority of the year, properties without gardens or balconies are being pulled into sharper focus.
It’s important to remember that people don’t move to cities just for work or their accommodation however, they move for the lifestyle. Cities have a unique advantage in the amenities they can offer, after all. What’s more realistic is we’ll see tenants spread outwards from the city core, identifying suburbs and quieter areas that can offer more spacious properties but still provide access to the city lifestyle.
London remains in a unique position. With prices still much higher than the national average, expect to see more people leaving the capital than previous years, seeking the affordability and space that other UK cities can provide. For those that work in the capital, commuter towns across the South East will likely be a popular alternative as connectivity is improved through projects such as Crossrail.
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Should you Invest in UK Buy-to-Let Property in 2021?
2020 presented – as it did for many other sectors – Buy-to-Let investors with plenty of challenges. The market closing in lockdown was the first hurdle, as predictions painted a harsh forecast for the remainder of the year. With transactions ceasing soon after and lockdown placing pressure on unemployment rates, many smaller landlords were forced to sell-up.
The outlook for the Buy-to-Let sector in 2021 however, is decidedly more optimistic. With property prices hitting record-breaking levels at the tail end of last year and clear signs of rental appetite in the market, it seems like the ‘mini-boom’ isn’t so mini after all.
With COVID vaccines entering circulation and a Brexit transition deal finalised, a degree of certainty has been restored to the market which will go some way in supporting rising property prices.
Angus Stewart, chief executive of Property Master, believes the sector’s resilience will demonstrate itself in the long-term: “Our survey shows the buy-to-let sector as a whole is a resilient one. Those landlords that have survived may well be stronger and our survey shows them as giving buy to let the thumbs up as we move into 2021.
“We see the year as being one of two halves. There is clearly a continued turbulence forecast for the first half of the year as Coronavirus and Brexit play out.
“But the fundamentals of the private rented sector remain and now more than ever an increased number of people need a good quality roof over their heads, which will create plenty of opportunity for landlords to do well.”
This raises an important point for the future of the Buy-to-Let market. Demand continues to soar across the UK and for many investors, the potential is there for incredible gains. Everybody needs a roof over their head and more people than ever are re-evaluating their surroundings, driving prices upwards as the market grows more competitive.