Due to the uncertainty of 2020, property investors are likely to treat the coming year with some caution and this is understandable. We believe that 2021 will be a much better year for property investors and we explain why in this post.
Rental Market in the UK likely to remain strong
According to Ludlow Thompson, the well-known London agents buy to let landlords have increased by 49% in the last five years. In 2020, the number was 2.7 million compared to 1.8 million 5 years ago. This is despite changes to stamp duty and mortgage relief and other issues landlords in the UK have had to deal with.
Despite the coronavirus pandemic, rental income has remained reasonably stable. A small number of tenants have had to defer their rent payments because of the effects of Covid-19 but this is a small number of around 4%.
First time buy to let investors are also on the increase. There are probably many reasons for this and the more stable house prices, stamp duty holiday and low mortgage rates will all have played a part.
Overseas Investors still favour the UK
Many experts predicted that there would be a dip in overseas property investment due to Brexit. The coronavirus pandemic would weaken overseas investment even further they said. However, this has not been the case. There is still strong interest from overseas investors in UK property.
Hong Kong has registered strong interest in UK property investment and this is likely to be more intense in 2021. Overseas investors still consider the UK as a good place to invest in property. The pound is not as strong as it was and this makes investing in UK property even more attractive.
Look out for Tax Changes in 2021
There is no doubt that the coronavirus pandemic has severely strained government finances. They will need to find a way to claw some of this money back so you can expect some changes in property taxation as things settle down in 2021.
One area that is most likely to change is Capital Gains Tax. This will affect you as a property investor because you will own more than one property. If the government does make changes to CGT you can expect to see a high level of property investment activity before any deadlines for this come into play.
Buy to Let will still be popular
Zoopla confirmed that the demand in the private rental sector was 20% higher in 2020 than it was in 2019. The second half of 2020 saw strong demand for private rentals. If you are in the buy to let market, or thinking of getting into it, this is very good news looking forward.
We predict that there will be strong demand for rental properties across the country in 2021. The Covid-19 vaccine is excellent news for all of us, but it is going to take some time to roll this out across the country. Therefore, there will still be some uncertainty around employment so people will continue to rent.
More Property Investment Hotspots emerging
There are a number of regeneration projects surging forward in the UK despite the pandemic. This has resulted in more property investment hotspots emerging in the UK. Here you can purchase properties for a lower price than the surrounding areas. Areas to look out for are:
- Bootle
- The Wirral
- South Shields
- Purfleet
- Wembley
- Northampton
- Derby
- Leicester
- Cardiff
So considering everything, 2021 looks like it could be a great year for property investment. We would like to take the opportunity to wish all of our readers a happy, healthy and prosperous 2021.
