Sharp Increase in Landlords Jumping Back into the UK Property Market

One in 10 landlords are now planning to buy properties and expand their portfolio, compared to just 3 per cent at the end of last year, research has found.

At the end of 2019, 82 per cent of landlords claimed that they had no plans to acquire another property in 2020, and only 3 per cent were intending to add more than a single property to their portfolio.

However, now it seems attitudes have changed as landlords look to take advantage of the Chancellor’s stamp duty holiday that runs until 31 March 2021.

Soon after the stamp duty holiday was implemented, a tenth (10%) of landlords changed their tune, admitting they were now planning to purchase more properties and build their portfolio, while only 5 per cent said they had any intention of selling any existing properties, according to the research by insurance firm Simply Business.

Despite still having to pay a levy on their purchase, landlords and investors buying second homes in England and Northern Ireland are able to take advantage of the current stamp duty revisions as they benefit from the raised threshold. Previously, a property investor buying a £500,000 home would pay 3 per cent on the first £125,000, 5 per cent on the next £125,000 and 8 per cent on the remaining £250,000 resulting in a stamp duty bill of £30,000. Now, they only need to pay 3 per cent (£15,000) on the whole £500,000, which amounts to a £15,000 saving.

Lockdown may have also pushed up renter and homeowner demand in greener towns and villages, with recent figures from Rightmove revealing that property searches have doubled for homes in small towns and villages with populations of less than 11,000.

This rise in confidence could lead to a spike in investments away from the city, including in the countryside and coastal towns. At the end of last year, a third (29%) of UK residential landlords already believed properties in city centres no longer represented a worthwhile investment. Now with more landlords intending to purchase, Simply Business believes we could see this come to fruition, with a spike in investments outside of the cities.

Alan Thomas, UK CEO at Simply Business, comments: “The coronavirus outbreak and consequent lockdowns have been transformational in UK renters’ attitudes towards property, and therefore where landlords are looking to make their next investment.

“The pandemic has resulted in people spending more time at home – both for work and leisure, while many of the benefits of city living have been impacted. It’s no surprise to see that renters are valuing larger properties with outdoor space.”

It’s natural that landlords will buy where the tenant demand is. However, once life returns to normality, it will be interesting to see if this trend continues or tenant demand returns to the cities.