Buy-to-let 2021 – what will Covid and Brexit mean for the market?
- Fabrik Invest looks at the likely effect of Covid and Brexit on the buy-to-let market
- 41,700 buy-to-let companies set up in 2020 (Hamptons)
- Bank of England looking into potential of history-making negative interest rate
2021 is shaping up to be a big year of the UK buy-to-let sector. Huge, in fact. Hamptons has just reported a record number of new limited companies incorporated in 2020 with the specific purpose of holding buy-to-let properties. 41,700 such companies were incorporated in 2020, meaning that the number of them has doubled since 2016, when the government began ramping up the tax burden faced by buy-to-let investors.
So, will Covid and Brexit combine to finally dent interest in UK buy-to-let investments, when even the prospect of paying more tax hasn’t deterred investors? Unlikely, says Dale Anderson, Managing Director of Fabrik Invest.
“The UK remains a promising and active market for fully managed buy-to-let properties. The country has a fundamental lack of supply and that’s unlikely to change; we simply can’t build homes fast enough. For overseas investors, Brexit actually presents potential for savings, as currency exchange rates fluctuate. Add to that the fact that Covid is bringing about opportunities such as discounted deals and suddenly 2021 is shaping up to be a huge year for the buy-to-let sector.”
Dale Anderson, Managing Director, Fabrik Invest
Fabrik Invest flags up buyers from the Middle East, Hong Kong and South Africa in particular when it comes to key investor demographics overseas this year. The company also points to the impact of interest rates and fiscal policy on the 2021 buy-to-let sector.
At present, interest rates remain at the historic low of 0.1%. Not only that, but the Bank of England’s Monetary Policy Committee has been openly looking at the potential impact of a negative rate since June 2020. Such a move would be the first time in history that the UK has had a negative interest rate and would be excellent news for borrowers. Even without a further reduction, the current low makes mortgage borrowing in 2021 an attractive prospect.
“With borrowing rates at a record low, now is an excellent time to invest in property. The government is printing another £150 billion due to the pandemic – a move that will catch up with it eventually. It carries with it the potential for the currency to devalue and inflation to rise, meaning that tangible assets such as bricks and mortar carry an even more reassuring degree of safety than usual.”
Dale Anderson, Managing Director, Fabrik Invest
So, where will investors be focusing during 2021? On regional markets mainly, based on Fabrik Invest’s insights. Michigan Towers, in the heart of the MediaCityUK site in Salford Quays, Manchester, epitomises this regional trend. The contemporary homes have been designed to suit working professionals who want everything on their doorstep, while benefitting from high quality interiors and impressive views.
Covid will come into play in this respect, as demand for apartments with communal gardens, rooftop terraces and innovative home-working spaces continues to increase.
“We saw a push towards a more rural way of life as the pandemic took the nation in its grip in 2020. However, mass vaccinations over the course of 2021 are likely to drive a resurgence of confidence in the urban lifestyle, with people finally able to enjoy the UK’s cities to the full once more. This is why so many or our investors are seeking apartments right now, rather than lower-yielding houses. It’s yet another factor that is underpinning the success of the buy-to-let market in 2021.”
Dale Anderson, Managing Director, Fabrik Invest
For more information, please contact Fabrik Invest on 020 8175 9891 or enquiries@fabrikpropertygroup.com, or visit www.fabrikinvest.com