podcast investor

Podcast: Property Investing in 2021

A Q&A with Buy-to-Let expert, Jen Yeates

Our latest episode examines whether or not now is a good time to be a landlord or whether it is worth investing in buy to let property.

With lots of new legislation over recent years and in the pipeline, the changing tax landscape and the impact of Covid on housing requirements in the rental market, it is certainly a complicated picture.

Jen Yeates, a Regional Manager for Lettings in the South West of England shares some insight from her experience of the marketplace and what landlords are telling her directly.

Listen to the full episode here or read the full transcript below.

Demand for rental property is crucial to market buoyancy, what are you seeing?

The demand for rental property remains exceptionally high in many areas. Indeed, having enough rental stock to satisfy demand is a key challenge for many lettings agents at the moment. The pandemic resulted in quite a shift in such things as workplace arrangements and what people saw as being important for their lifestyle - and hence what type of property could fulfil that. One example is that many more tenants are looking for properties that offer more space. When I say space, this covers a variety of definitions! Space both inside the property, such as an extra office room, as well as outside has become a key feature. Also, locations that offer a feeling of space, such as more rural locations with easy access to parkland and other green areas have seen a really big increase in demand.

So overall demand has both increased and seen a shift in what people prioritise due to events over the last year. What evidence is there that demand has impacted prices?

Within the South West area that I directly cover, we have seen a real premium added to rental prices, a reflection of the type of locations available and wanted in this less urbanised part of the world. At the time of this conversation, stats from Zoopla show that Bristol, where I am based, has seen a 3.4% annual increase in rental prices with an average of £1,068. In the South West in wider terms, there has been a 3.9% annual increase and a time to rent of just 11 days, one of the quickest in the UK.

Those are interesting numbers, do you know what the wider UK picture looks like?

From Zoopla, there has been an overall increase in rents across the UK of 2.3% annually so a pretty rosy picture. But there are variations, however – that figure excludes London which has actually seen an 8.3% fall mostly due to a fall in demand in London. Interestingly, other central city areas are also seeing supply out-strip demand, which I think is connected to the earlier point about a desire for more space – space which is hard to come by in heavily populated urban areas.

So an overall increase in demand and rental prices but variation around the UK. What other effects have you personally noticed on business?

Well, the pandemic has impacted people’s lives in many different ways, whether it is sadly the illness itself or knock-on impacts such as a business’s ability to operate and consequent job losses. This has resulted in a feeling of insecurity and the lettings industry is not immune. One example is the increase in demand seen on insurance products. We have seen a much higher demand for Rent and Legal Protection insurance. This offers landlords rental security should tenants fall into arrears. Increased take-up is a real reflection of the desire to mitigate risk where possible - something that was perhaps not as much at the forefront of people’s minds before the pandemic.

So people are facing up to issues of risk more readily. Is buy to let itself a risk at this current time?

Well actually, the private rented sector seems to be very resilient in times of crisis. Historically, property has been a safe and stable investment and weathered many a storm. Taking a long term view, property prices have continually grown – and property, like any investment, should be viewed for its long term performance, therefore it would appear to be a solid option. Of course, past performance is not a predictor of the future but that is the same for any investment.

Do you have any real-life examples of how buy to let investments are working out for customers?

Yes, I do have some examples taken from one branch alone, which shows the appetite for investing. This particular branch is on the city outskirts of Bristol and has seen a huge spike in tenant demand over the last 12 months, with professional couples and families moving further out of the city centre due to working from home, looking for more space for an office as well as outdoor space (garden or balcony) – all the reasons mentioned earlier. 4 investors have purchased properties through the branch so far in 2021, that have generated really strong rental yields, ranging from 4.7% to 6%. All 4 of the properties were let within the first week of marketing!

So rental properties generating strong yields and also quick buy to let - it does sound as if investing in property is a good option then?

Yes, and with interest rates at rock bottom levels and mortgage availability growing, it could be a great time to invest in property before growth starts to pick up and prices start to rise, as many experts are predicting they will do in due course. There is also of course the stamp duty extension as well which provides a window of opportunity to save on what may otherwise be a significant cost. With rental demand increasing each year (according to Zoopla, around 20% higher in January than the same time last year) then investing in property looks like a possible strong option for anyone’s investment portfolio.

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