12 months ago as we emerged from the first lockdown, housing/mortgage/property stakeholders who were still trying to work how long the housing market would be closed for and, of course, how the pandemic would shift the norms, not just of their specific sectors, but the wider economy and society in general.
Landlords were not spared this, particularly given the situation for tenants who had been furloughed and were also trying to work out what that meant for their future employment and therefore how they would continue to fund their expenses such as rent.
There’s no doubting that it’s been a challenging year. A lot is often written in the media about landlords and their motivations, their treatment of tenants, etc, but our recent research with nearly 900 landlords in conjunction with BVA BDRC, which took place between March and April this year, shows that landlords have been as accommodating as they possibly could be, passing on any mortgage holidays they might have taken and working with tenants to ensure they could continue to make a level of rental payment that was affordable.
It’s therefore perhaps no surprise that during a lot of 2020, landlord confidence took a dent. While you might have been positive about the long-term prospects of your portfolio given the nature of the investment, the shorter to medium-term horizon might seem rather more uncertain.
However, even with the 2020-21 lockdown, the good news is that landlord confidence has improved, and on some metrics has improved significantly. The research shows confidence having grown across all five key business indicators measured – prospects for capital gains (up 26% points year-on-year) and confidence in landlords own lettings business (up 25% points year-on-year) being the two highlights.
Overall, that means landlord confidence has been consistently rising since the lows we saw in Q1 last year, with the highest proportion of landlords now feeling upbeat as have done on the near-term outlook for the wider PRS and capital gains, since the tail-end of 2016.
Understandably rising landlord confidence – especially when it comes to their own lettings business – means that opportunities to add to portfolios are looked at with renewed vigour.
The stamp duty holiday has also acted as a considerable catalyst, but even as this tapers down, we anticipate landlords will still want to purchase and remortgage in order to release existing equity to put towards those new properties. Clearly, no-one is now giving any guarantees to borrowers that purchases can be completed before the end of June – not that we give guarantees on any timescale – but there could still be a saving to be made by the end of September.
That said, landlord borrowers are cognisant they might not even complete by then, however we anticipate this isn’t putting them off – the continued interest in our fee-assisted products for purchases and remortgages, and demand for our HMOs/MUBs range shows that if landlords have found the right property, in the right location, with strong tenant demand, and good yield to be had, they are wanting to make that purchase.
Overall, therefore the soundings coming out of the landlord community – particularly amongst portfolio players – appear to be growing in positivity. Activity levels remain strong, and the buy-to-let mortgage borrower is increasingly well-catered for, in a highly-competitive market. Good news, and a further confidence builder, for all.
George Gee is commercial director at Foundation Home Loans
