Dale Anderson, Managing Director, Fabrik Invest, comments: “There's still plenty of interest from investors looking to become landlords. Indeed, the Bank of England putting banks on notice to prepare for negative interest rates in the next six months is doing much to fuel a shift of liquid assets into bricks and mortar. Many of our investors are already moving to do this. What's interesting is the sustained shift in the types of property that they are seeking.”
It is the shared working space, as well as the outdoor areas, which Fabrik Invest has found that investors are increasingly focused on. Home-based working has flourished of necessity during the pandemic, but over the longer term, it will continue out of choice for many.
Dale continues: “The increase in home working is driving interest in on-site co-working spaces like never before and it's not stopping there. Many investors are now looking to put their cash into properties with an additional bedroom that can be used as an office. Landlords are adapting their behaviours and approach to the new normal.”
It is city centre homes in particular that landlords are scrutinising through a new Covid-lens. People aren't using city centres in the same way they used to. Many behaviours are expected to return to normal as the vaccine rollout reaches the masses. However, the fact that Covid-19 may well move from pandemic to endemic in the human population means that some changes will be for good. This means, according to the Fabrik Invest team's experience, that landlords are hedging their bets by investing in homes with on-site facilities that make localized living easy.
Location-wise, it's all eyes on the North West. Savills' latest mainstream residential market forecast pegs the North West as leading the UK for house price growth over the next five years, projecting growth of 27.3% for the region (compared to 20.4% for the UK as a whole). This is already unfolding, looking at recent figures. Zoopla's latest House Price Index shows that the highest house price growth since April 2017 is being led by northern cities, with Liverpool house prices climbing by 6.3% over the past year, followed by those in Manchester at 6%. But that's not to say that landlords are looking in precisely the same locations within these cities that they were pre-pandemic, according to Fabrik Invest.
Dale concludes: “In big cities like London, Birmingham and Manchester, we are seeing investors looking at areas further out, such as the home counties and commuter belt towns for London. Kent is a good example of this – it has good transport connections for those who need to commute into London, as well as plentiful green space and more affordable prices than the capital. In Manchester, it is Salford Quays that is turning heads. Tenant demand is strong there and investors are racing to meet that demand.”
As 2021 unfolds, all eyes will be on the UK housing market to see what happens after the stamp duty holiday ends. Ultimately, though, the country has a sustained imbalance between its supply of rental homes and the demand for those homes. With the prospect of negative interest rates also coming into play, demand from investors doesn't look to be dropping off any time soon.
