Is now the right time to invest in buy-to-let?

By Bridging Loan Directory 13th August 2020

New research from The Halifax reveals that UK house prices set a new record after four months of falls, with a 1.6% rise in July up from £237,834 in June, raising average property values to £241,600.

House prices have risen 3.8% since year-on-year in a surprising spike after the market was put on pause earlier this year.

This mini boom has pushed average property values up by 1.6%, or £3,770, month-on-month in July.

This was the first increase in prices reported by Halifax in five months, which bases its index on mortgages it has approved, and meant the annual rate of growth increased to 3.8%.

Despite this spike in prices, the pandemic and its effects on the UK economy have somewhat diluted the appetite of potential investors.

The same can also be said for the major reforms introduced by the government over the past three years, paving the way for a more hostile environment for landlords in the UK.

Most industry experts expected property prices to plummet during the height of the coronavirus crisis, but this turned out not to be the case.

Instead, they have continued to climb at a slower pace than normal and this recent spike is an early sign that some semblance of ‘normalcy’ is returning over the coming months and years.

According to UK Property Finance, lower property values than what would have been expected at this juncture in 2020 and extremely low interest rates, is providing established landlords and first-time investors alike, a golden opportunity.

Craig Upton, Marketing Director of UK Property Finance commented:

“For several years now, the UK has been widely regarded as a haven for buy-to-let investments.

From casual investors with just a single rental property, to those with extensive portfolios spanning the British Isles, skyrocketing rent prices have attracted investors from near and far.

Though surprisingly, there are those who firmly believe that now could be the perfect time to consider a buy to let investment.

Whether you are considering your first buy-to-let venture or looking to expand your existing portfolio, the aftermath of the Covid-19 pandemic could be quite beneficial for some.

For one thing, real estate experts across the UK are expecting a vast wave of pent up demand to be released over the coming weeks and months.

Those unable to move due to mandatory lockdown and business closures are now free to put their plans into action, which could see demand for rental properties soar and average rents spike as a result.

It’s also widely predicted that impaired job prospects and economic uncertainty for many will drive up demand for rental properties.

It’s likely to be some time before the British public have the financial confidence needed to make major purchase decisions, further increasing demand for rental properties.

All of this is likely to be compounded by the difficulties many will encounter in both raising the funds necessary to qualify for a mortgage and getting their applications approved by major lenders.”