COVID-19 GUIDANCE

The media may be full of the dire economic effects of Covid-19, but one area where the news is distinctly less gloomy is when it comes to being a buy-to-let (BTL) landlord, i.e. purchasing properties purely for the purpose of letting them out.

The sector still offers a viable opportunity for investment as demand for housing remains strong across the UK. And things are likely to stay that way, with renting holding its own as a popular option for accommodation during these uncertain times.

In particular, two-bed homes are great investments for BTL landlords when it comes to rental yields, according to figures published earlier this year by a lettings management company. But one online property portal reported that in the UK’s rental market, demand for all rental homes had soared by a third in May compared with the previous year.

What’s more, the south east is one of three areas in the country to have seen rental yields increase between April and June, compared with 2019, with the region seeing a 0.6% rise in rental yields to 5.5%. Some 96% of landlords in the area made a gain from BTL, according to figures from a major property brand. The south east is also where people receive the highest weekly wages outside the capital.

It’s true that landlords will do well to stay flexible and juggle yields with costs and rent charged given than some tenants may be experiencing financial difficulties.

But with the rental sector set to play a key and increasing role in meeting Britain’s future demand for housing, there’s a genuine feeling of things heading in the right direction.

Good news on the mortgage front

There are also indications that lenders want to help current and would-be landlords meet the UK’s growing demand for rental accommodation.

Last month, the market for buy-to-let (BTL) mortgages showed that more of these sorts of products were becoming available, while typical rates on some higher loan-to-value (LTV) deals had fallen. Indeed, the range of mortgages available to buy-to-let landlords has now virtually returned to pre-pandemic levels, as a greater tolerance of risk begins to emerge.

Numbers of products leapt by 280 between May and June, giving new and existing landlords a great deal of choice. Five-year, fixed-rate BTL mortgages increased more than any other product type in recent weeks, by 54 for landlords wanting an LTV of 75%. Two-year, fixed-rate deals follow closely behind with 46 new products on offer, again at an LTV of 75%.

If you prefer an 80% LTV, traditionally a smaller sector, there are now 26 and 20 more products for two-year and five-year fixed-rate mortgages respectively.

It is true that overall rates on both two and five-year BTL products with fixed rates have gone up a little since the beginning of May. However, this could be simply because averages are now based on a greater range of products. And for those who like an 80% LTV, rates on both types of product have gone down – 0.49% for two-year and 0.67% for five-year loans.

What’s more of course, the Bank of England’s base rate is still at a historic low of 0.10%.

All of which means investors are being encouraged to look again at their portfolios and how these are financed; equally, the time could also well be ripe for fresh investments. Meanwhile, for those who are new to BTL, it could be the perfect time to explore your options seriously. But, whatever your situation and whatever you want to do, it’s also probably a good time to act quickly.

Of course, the full long-term impact of the coronavirus on the economy generally and house prices in particular remain unknown. And clearly the pandemic is far from over. Yet the reality is that investing in property now, or adjusting your current portfolio, could well be a smart move.

How we can help

At Oakfield Estate Agents, we offer an excellent package to both tenants and landlords. With a quarter-century’s industry experience to our names, our services are tightly tailored to individual needs, and we offer complete property management so everything is taken care of.

Chief executive Neil Newstead commented: “We’ve been doing this a long time, and our landlords always know they’re in safe hands with us at Oakfield.

The national picture we’ve been hearing about bears out what we’ve been seeking locally with rentals in East Sussex. Even during lockdown, our lettings teams across Hastings, Bexhill and Eastbourne have kept very busy. Since the market reopened, we’ve been busier than ever, and we’re finding we’re letting many homes to pre-registered tenants even before the properties have come on to the open market. And, given that demand remains high, rents are rising.

We’d urge anyone with a place to let out in one of our areas, or anyone who wants to buy as an investment, to get in touch by email first of all. Alternatively, check out our handy online rental yield calculator to get an initial idea of how much a property could make you in terms of monthly rental income.