Is 2021 the Year to Invest in Property?
Following on from 2020, property investors are naturally worried about their portfolio, with some contemplating leaving the market entirely.
We’re living in an age of eviction uncertainty and rapidly changing regulations – the impending Renters’ Reform Bill as well as concerns of an increase in Capital Gains Tax to name just a couple. It’s no wonder that those who are investing in property – whether they are looking to expand their portfolio or just holding onto their assets – are having second thoughts right now. But what should property investors really be considering for 2021?
The start of 2021 for the private rented sector
Just like the steady but productive Covid vaccine rollout in the UK, we expect to see a speedup of rental demand as the months go on and ‘normality’ resumes.
We’re lucky to say that the housing market didn’t shut down in the third nationwide lockdown to match the first. We typically see the start of the year bring a rise in the number of rentals, especially after the slump often found in the holiday season. But even with the sudden announcement of the third lockdown at the beginning of January, we noticed this has had much less impact on renters’ decisions to move compared to the rental market shutdown that we saw in March 2020. Furthermore, rents have risen by 6% in the UK since January last year, excluding London, as shifting tenant behaviours favour properties further from the city.
The end to the stamp duty holiday is nigh – but investors shouldn’t use this as an excuse to rush the process and find a property quickly. Like all investments, it’s important to take time in weighing up all your options. Instead, make sure to determine rental trends and the area, and consider the long-term as well as the short.
Will there be growth in the property market this year?
While growth isn’t expected in 2021, it shouldn’t be a reason to deter you from considering investing in property, and it certainly shouldn’t convince you to leave the property market all together. Like most investments, property is a waiting game, so if you have the means to wait, it’s best to ride out the losses in precarious times, and await capital growth.
Some property investors are wary of incoming regulation changes to the private rented sector, from how COVID-19 will continue to impact regulation, to the upcoming end to section 21 notices.
However, despite all this, those who invest in the private rented sector remain optimistic. In fact, as much as 45% of landlords are optimistic about the state of the buy-to-let market this year, from a survey by Property Master.
So, unless you’re in the risky business of property flipping, don’t be disheartened by any decreases in growth; property is a long-term investment so it’s important to keep focused beyond what is immediately discernible ahead.
Is now the time to invest in Built-to-Rent?
Researchers and investors alike expect 2021 to be the year when the full value of build-to-rent can be ascertained. With strong rent collection numbers during the pandemic, investors now see the build-to-rent market in the UK as a strong asset. Countries such as the Netherlands, Germany and the US, where build-to-rent has been long established, see an even split in the rental sector of BTR and buy-to-let properties.
BTR is booming despite the lockdown, as it provides strong, steady returns with less exposure to void. Dominic Martin, Senior Advisor to Global Apartment Advisors, notices that in the US, “BTR is very much an established institutional asset class and highly-sought after by domestic and international investors”.
At RentProfile we develop technology that helps streamline the setup and management of new tenancies. In the past year we have seen an increased demand from BTR developers; by nature of their larger scale developments with many units, there is greater repetition of administrative tasks compared to a typical letting agent. With this comes an even bigger opportunity to provide an easy experience for tenants and landlords. Our recent product Onboarding takes a typical two-week tenancy setup process down to 1-2 days, and as quick as 20 minutes.
Only time can definitively tell what the rest of 2021 holds for the property market. But making sure to think long-term beyond this current year is paramount for investors.
This guest post was provided by Amy Butterworth from RentProfile, a company specialising in developing new technology platforms for the rental market. The opinions expressed by the guest writer above and those providing comments are theirs alone, and do not necessarily reflect the opinions of SevenCapital or any employee thereof. SevenCapital is not responsible for the accuracy of any of the information supplied by the guest writer.