Table of Contents
Executive Summary
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- Impact of COVID-19 on investing in property
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- Figure 1: Short, medium and long-term impact of COVID-19 on investing in property, April 2021
- The market
- Overall buy-to-let mortgage market continues to grow…
- …but COVID-19 hits new lending
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- Figure 2: Volume and value of new buy-to-let mortgages, 2016-20
- New lending expected to return to growth in 2021
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- Figure 3: Forecast of new buy-to-let mortgage advances, 2015-25 (prepared April 2021)
- House purchase sector outperforms remortgaging activity
- Unprecedented levels of savings could fuel the market
- Private rents continued to increase despite pandemic
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- Figure 4: Annual change of Index of Private Housing Rental Prices, January 2016-February 2021
- Relief as regulatory outlook remains positive for 2021
- Companies and brands
- Despite pandemic, largest lenders see growth in their BTL books
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- Figure 5: Market share of buy-to-let lending by amounts outstanding, selected lenders, 2019-20
- BTL availability suffers in 2020 as lenders withdraw products
- Payment holidays affect cash flow…
- …and a spike in bad debts is expected
- Opportunity to use green products as a differentiator
- The consumer
- 10% of savers/investors own a rental property or second home
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- Figure 6: Ownership of financial assets, March 2021
- Rentals are the most common type of property investment
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- Figure 7: Ownership of investment property or second home, March 2021
- 57% of investors have a mortgage on their investment property
- Unequal impact of COVID-19 on investors creates range of opportunities
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- Figure 8: Impact of COVID-19 on property investors, March 2021
- Investors need support future-proofing their investment post-COVID-19
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- Figure 9: Property investors’ short-term plans, March 2021
- Most people can see themselves as property investors
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- Figure 10: Motivations to invest in property, March 2021
- Interest in indirect property investments highlights gap in the market
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- Figure 11: Interest in property investments, March 2021
- Importance of addressing ethical concerns among potential investors
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- Figure 12: Attitudes towards investing in property, March 2021
- COVID-19 creates new opportunities but also highlights risks
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- Figure 13: Attitudes towards the impact of COVID-19 on investing in property, March 2021
Issues and Insights
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- COVID-19 hits a heavy blow, but market shows resilience…
- …with conditions improving in 2021
- A once-in-a-generation widening of opportunities
- Parents are a key demographic for future growth
The Market – Key Takeaways
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- COVID-19 hits new lending, but market remains resilient
- Remortgaging activity affected by COVID-19 and preference for longer deals
- Faster-than-expected recovery and encouraging conditions could boost market in 2021
- Relief as regulatory outlook remains positive for 2021
Market Size and Forecast
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- COVID-19 brings new challenges to the property investing market
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- Figure 14: Short, medium and long-term impact of COVID-19 on investing in property, April 2021
- Buy-to-let mortgage market continues to grow…
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- Figure 15: Number of buy-to-let mortgages outstanding, 2010-20
- …but COVID-19 hits new lending
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- Figure 16: Volume and value of new buy-to-let mortgages, 2016-20
- New lending expected to return to growth in 2021
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- Figure 17: Forecast of new buy-to-let mortgage advances, 2015-25 (prepared April 2021)
- Figure 18: Forecast of new buy-to-let mortgage advances, 2020-25 (prepared April 2021)
- Market drivers and assumptions
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- Figure 19: Key drivers affecting Mintel’s market forecast, 2015-25 (prepared April 2021)
- Learnings from the last recession
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- Figure 20: Volume and value of new buy-to-let mortgages, 2007-13
- Forecast methodology
Market Segmentation
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- House purchase sector outperforms remortgaging activity…
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- Figure 21: New buy-to-let mortgages, by purpose of loan, 2016-20
- …but remortgaging accounts for the lion’s share of new lending
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- Figure 22: Remortgaging activity as a percentage of total new buy-to-let business, 2002-20
Market Drivers
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- Economy expected to recover in 2021…
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- Figure 23: GDP growth, 2016-25 (central forecast)
- …as unprecedented levels of savings could fuel the market
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- Figure 24: Household deposits, 2009-20
- Uncertainty increases appeal of fixed-rate deals
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- Figure 25: Quoted monthly buy-to-let mortgage rates at 75% LTV, February 2012-February 2021
- Demand for buy-to-let lending hit by lockdowns
- Private rents continued to increase despite pandemic
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- Figure 26: Annual change of Index of Private Housing Rental Prices, January 2016- February 2021
- Stagnating social housing boosts the private rented sector
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- Figure 27: England housing stock, by tenure, 2008/09-2019/20
- ‘Staycation boom’ boosts UK holiday rentals
Regulatory and Legislative Changes
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- COVID-19: Eviction ban extended until mid-2021
- Landlords are encouraged to be flexible with payment difficulties
- Temporary reduction in SDLT extended…
- …and additional surcharges now apply for non-residents
- Relief as CGT unchanged and exemption extended until 2026
- Build Back Better: focus on levelling up UK regions
- Brexit deal leaves unanswered questions
- RICS updates guidance on cladding inspections
- Green agenda to help improve energy efficiency and meet targets
Companies and Brands – Key Takeaways
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- Despite pandemic, largest lenders see growth in their BTL books…
- …but lenders’ caution dampens competition and product availability
- Opportunity to use green products as a differentiator
Market Share
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- LBG remains the largest BTL lender
- Nationwide and Santander see strong growth in 2020
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- Figure 28: Market share of buy-to-let lending by amounts outstanding, selected lenders, 2019-20
- NatWest Group continues to lose market share
- OneSavings Bank Group reports growth driven by professional landlords
Competitive Strategies
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- BTL availability suffers in 2020 as lenders withdraw products…
- ...creating opportunities for specialist lenders
- Payment holidays affect cash flow…
- …and a spike in bad debts is expected
- Providers test the scope and reach of online channels
- Opportunity to use green products as a differentiator
The Consumer – Key Takeaways
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- COVID-19 deepens the pool of potential investors
- Unequal impact of COVID-19 on investors creates range of opportunities
- Investors need support future-proofing their investment post-COVID-19
- Most people can see themselves as property investors
- Interest in indirect property investments highlights gap in the market
- Importance of addressing ethical concerns among potential investors
- COVID-19 creates new opportunities but also highlights risks
Impact of COVID-19 on Consumer Behaviour
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- Significant levels of savings accumulated during pandemic
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- Figure 29: Impact of COVID-19 on Level of Savings, 4-12 March 2021
- Financial confidence continues to recover
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- Figure 30: The Financial Confidence Index, April 2016-March 2021
Ownership of Investment Property and Second Homes
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- 10% of savers/investors own a rental property or second home
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- Figure 31: Ownership financial assets, March 2021
- Rentals are the most common type of property investment
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- Figure 32: Ownership of investment property or second home, March 2021
- 57% of investors have a mortgage on their investment property
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- Figure 33: Ownership of mortgage on investment property or second home, March 2021
Impact of COVID-19 on Property Investors
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- Investors split over the impact of COVID-19 on their property investment
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- Figure 34: Impact of COVID-19 on property investors, March 2021
- Opportunities to support those with property abroad
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- Figure 35: Impact of COVID-19 on property investors, by type of property owned, March 2021
Property Investors’ Short-Term Plans
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- Majority of investors are likely to take action within the next two years
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- Figure 36: Property investors’ short-term plans, March 2021
- Renovations could future-proof the appeal of investments
- Opportunity to help investors identify new areas with high potential
Motivations to Invest in Property
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- Most people could see themselves as property investors
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- Figure 37: Motivations to invest in property, March 2021
- Potential investors are more likely to be motivated by personal reasons…
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- Figure 38: Motivations to invest in property, by investor status, March 2021
- …while existing investors are influenced by market conditions
Interest in Different Types of Property Investments
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- Prospective investors are interested in a range of investments…
- …including indirect alternatives
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- Figure 39: Interest in property investments, March 2021
- Existing investors more likely to consider property for family to live in
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- Figure 40: Interest in property investments, by investor status, March 2021
- Potential new investors could fuel the buy-to-let sector…
- …and are open to projects and holiday homes
Attitudes towards Investing in Property
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- Brexit highlights opportunities to support investors with property abroad
- High uncertainty increases appeal of property as an investment, especially among parents
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- Figure 41: Attitudes towards investing in property, March 2021
- Importance of addressing ethical concerns
How COVID-19 is Changing Perceptions of Property Investing
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- Potential investors expect COVID-19 to create new opportunities…
- …but it has also highlighted the risks associated with letting
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- Figure 42: Attitudes towards the impact of COVID-19 on investing in property, March 2021
- Parents living in cities could be perceptive of new opportunities to invest
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- Figure 43: Agreement with the statement ‘The COVID-19/coronavirus outbreak will create new opportunities to invest in property’ – CHAID – Tree output, March 2021
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
- CHAID analysis methodology
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- Figure 44: Attitudes towards COVID-19 and Investing in Property – CHAID Tree output, March 2021
Appendix –Forecast Methodology
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- Forecast methodology
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