Consumer Attitudes towards Investing in Property - UK - April 2021

OVERVIEW
Key issues covered in this Report
Market context
Economic and other assumptions
Products covered in this Report
EXECUTIVE SUMMARY
Impact of COVID-19 on investing in property
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
Figure 2: Volume and value of new buy-to-let mortgages, 2016-20
New lending expected to return to growth in 2021
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
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
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
Figure 6: Ownership of financial assets, March 2021
Rentals are the most common type of property investment
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
Figure 8: Impact of COVID-19 on property investors, March 2021
Investors need support future-proofing their investment post-COVID-19
Figure 9: Property investors’ short-term plans, March 2021
Most people can see themselves as property investors
Figure 10: Motivations to invest in property, March 2021
Interest in indirect property investments highlights gap in the market
Figure 11: Interest in property investments, March 2021
Importance of addressing ethical concerns among potential investors
Figure 12: Attitudes towards investing in property, March 2021
COVID-19 creates new opportunities but also highlights risks
Figure 13: Attitudes towards the impact of COVID-19 on investing in property, March 2021
ISSUES AND INSIGHTS
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
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
COVID-19 brings new challenges to the property investing market
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…
Figure 15: Number of buy-to-let mortgages outstanding, 2010-20
…but COVID-19 hits new lending
Figure 16: Volume and value of new buy-to-let mortgages, 2016-20
New lending expected to return to growth in 2021
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
Figure 19: Key drivers affecting Mintel’s market forecast, 2015-25 (prepared April 2021)
Learnings from the last recession
Figure 20: Volume and value of new buy-to-let mortgages, 2007-13
Forecast methodology
MARKET SEGMENTATION
House purchase sector outperforms remortgaging activity…
Figure 21: New buy-to-let mortgages, by purpose of loan, 2016-20
…but remortgaging accounts for the lion’s share of new lending
Figure 22: Remortgaging activity as a percentage of total new buy-to-let business, 2002-20
MARKET DRIVERS
Economy expected to recover in 2021…
Figure 23: GDP growth, 2016-25 (central forecast)
…as unprecedented levels of savings could fuel the market 
Figure 24: Household deposits, 2009-20
Uncertainty increases appeal of fixed-rate deals
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
Figure 26: Annual change of Index of Private Housing Rental Prices, January 2016- February 2021
Stagnating social housing boosts the private rented sector
Figure 27: England housing stock, by tenure, 2008/09-2019/20
‘Staycation boom’ boosts UK holiday rentals
REGULATORY AND LEGISLATIVE CHANGES
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
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
LBG remains the largest BTL lender
Nationwide and Santander see strong growth in 2020
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
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
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
Significant levels of savings accumulated during pandemic
Figure 29: Impact of COVID-19 on Level of Savings, 4-12 March 2021
Financial confidence continues to recover
Figure 30: The Financial Confidence Index, April 2016-March 2021
OWNERSHIP OF INVESTMENT PROPERTY AND SECOND HOMES
10% of savers/investors own a rental property or second home
Figure 31: Ownership financial assets, March 2021
Rentals are the most common type of property investment
Figure 32: Ownership of investment property or second home, March 2021
57% of investors have a mortgage on their investment property
Figure 33: Ownership of mortgage on investment property or second home, March 2021
IMPACT OF COVID-19 ON PROPERTY INVESTORS
Investors split over the impact of COVID-19 on their property investment 
Figure 34: Impact of COVID-19 on property investors, March 2021
Opportunities to support those with property abroad 
Figure 35: Impact of COVID-19 on property investors, by type of property owned, March 2021
PROPERTY INVESTORS’ SHORT-TERM PLANS
Majority of investors are likely to take action within the next two years
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
Most people could see themselves as property investors
Figure 37: Motivations to invest in property, March 2021
Potential investors are more likely to be motivated by personal reasons… 
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
Prospective investors are interested in a range of investments…
…including indirect alternatives
Figure 39: Interest in property investments, March 2021
Existing investors more likely to consider property for family to live in
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
Brexit highlights opportunities to support investors with property abroad 
High uncertainty increases appeal of property as an investment, especially among parents
Figure 41: Attitudes towards investing in property, March 2021
Importance of addressing ethical concerns
HOW COVID-19 IS CHANGING PERCEPTIONS OF PROPERTY INVESTING
Potential investors expect COVID-19 to create new opportunities…
…but it has also highlighted the risks associated with letting
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
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
Abbreviations
Consumer research methodology
CHAID analysis methodology
Figure 44: Attitudes towards COVID-19 and Investing in Property – CHAID Tree output, March 2021
APPENDIX –FORECAST METHODOLOGY
Forecast methodology