Richard Rowntree, managing director mortgages, the Paragon Banking Group, writing for Mortgage Strategy, says that landlords need to keep abreast of market trends and “should be reassured to know that demand for rented property remains.”
The Office for National Statistics forecasts indicate that there will be around 1.6m additional households in England by 2028, and according to Mr Rowntree, a significant number of these will be rented. “If landlords can provide good quality homes that meet a diverse mix of needs, people will want to live in them,” he says.
The Government has indicated a relaxing of the planning regulations designed to give developers more flexibility, remove red tape and speed-up the planning and home building processes.
Boris Johnson has said the new regulations will make it easier to build better homes in locations where people want to live, and will kick-start the construction industry in the process. This initiative is supported by the stamp duty holiday announce last week by the Chancellor, which seeks to stimulate property sales.
It’s too early to say exactly what the planning changes will be, and we should not get over excited, but “at first glance there are some interesting changes here,” says Mr Rowntree.
Even before Covid-19 retailers and the British high street were struggling to respond adequately to the structural changes hitting the sector. The sector is changing and has been for some time. No amount of Mary Portas style town centre initiatives seem able to reverse this trend: the attractiveness of the growing online economy, the ease and choice offered by online shopping, and the convenience of out of town retail parks, have seen to that. Covid-19 has just accelerated this process by a few years!
What this shift does mean is that the high street presents landlords and developers with more and more empty buildings, buildings whose values have been decimated and that are ripe for re-purposing. We’re unlikely to see “student flats and HMOs popping up on Oxford Street any time soon,” says Mr Rowntree, but those endless boarded up shops present a fantastic opportunity “to see city peripheries and smaller towns ‘levelled up’ as some of the biggest beneficiaries of the new regulations.”
So, thinks Rowntree, the buy-to-let market can play “a significant part in breathing life back into fading areas, providing homes for customers needed to help independent shops, cafes and restaurants thrive.” Research undertaken at Paragon suggests that landlords have the means to do this after securing funding that will enable them to take full advantage of the Stamp Duty holidays announced by the Chancellor.
Investors need to be careful how they gauge the “after Covid” effect. With more home working and the need for reducing our need and ability to congregate for work and leisure, while increasing desire for properties in open spaces, empty retail town centre units may not provide all the answers.
A move from city centres to urban offices, with ease of transport by road and parking space, gardens and open spaces may be a distinct possibility. It is perhaps “too early to tell if the things that currently top tenant wish lists are a temporary reaction to recent restrictions or a longer-term shift in how we view our homes,” says Mr Rowntree.
“Even if these trends are the start of something more permanent, and part of the ‘new normal’ that we’re still talking about, it clearly won’t apply to everyone. Not everyone has the desire or means to live in suburban or rural properties with big gardens. Not everyone will work from home all week.
“The key here is ‘good quality’. Deregulation increases risk and it’s important to acknowledge that some poor conversions resulted from the planning changes on disused offices.
“We must learn lessons from the past while addressing the issues of today. Sustainability is an obvious one, these planning reforms encouraging the development of brown belt land over green is indicative of environmental issues returning to the radar after being side-lined by coronavirus.”
Mr Rowntree says he is confident that landlords can do this, that the sector will again show resilience required and “that the growing number of professional portfolio landlords are in this for the long term and are well placed to deliver.”