Buy to Let has faced one blow after another over the last 12 months or so: an onslaught of new regulations making the task of letting considerably more onerous, a 3% increase in stamp duty on investment properties, a hike in income tax after the removal of tax allowances, a punitive capital gains tax regime for landlords, and stricter criteria on buy-to-let mortgage approvals, all deterring many landlords from adding to their portfolios.
Despite all of this, post Brexit rents in the capital continue to move ahead, demand for renting continues unabated, and as reported by Benham & Reeves Residential Lettings, one of London’s largest independent letting agencies, there is strong interest from overseas investors into the capital, keen to take advantage of a falling pound and the strong demand from tenants.
Branch managers at Benham & Reeves are reporting rising enquiries from potential tenants currently living and working in Europe, keen to move to the UK before its exit from the EU completes. A 17.2% increase since the start of the year is expected to increase further over the coming weeks.
Demand has been particularly strong in the City, Canary Wharf and east London offices. Most of the new enquiries, say Benham & Reeves, have been from professionals in the finance sector, with many planning to relocate and secure a job in the UK before secession is negotiated.
If the free movement of labour from the EU ceases with Brexit, many anticipate it being more difficult to gain access to the UK employment market given a proposed Australian-style points system.
“Like many in this country, we initially felt that Brexit would have an adverse effect on the property market,” comments Benham & Reeves’ Anita Mehra,
“While it may still prove to have a negative effect on the wider property market, the initial reports from our branches indicate that it could actually prove to be of benefit to the prime central London (PCL) lettings market.”
Meanwhile, Student rents across the UK have been rising at twice the rate of mainstream rents. Again, agents Benham & Reeves Residential Lettings says student rents have risen by 55.5 per cent over the past 20 years, compared to 24 per cent for non-student properties.
The firm, which undertook a survey of its offices and their respective student properties and tenants over the course of two decades, says the average monthly spend on rent has increased while the number of sharers has markedly decreased.
Despite the advent of university tuition fees, the company says students are no longer prepared to live in substandard accommodation. It seems students are demanding, particularly in the capital, but this is a national trend as well, “well maintained and decorated properties with high speed internet, ensuite bathrooms and state-of-the-art kitchens”. Thus, says the agency, much of the increase in rental costs is down to higher standards of accommodation.
“Those who have sought degrees tend to be more affluent. Simultaneously, universities have topped up numbers by welcoming greater numbers of overseas students. These groups simply aren’t prepared to live in traditional student houses with five rooms to one toilet and a very basic kitchen” says Benham & Reeves’ Marc von Grundherr.
Grundherr says private halls of residence have increased in popularity, many with rents approaching £400 per week. “Unsurprisingly, many students are also turning to studio and one bedroom apartments that command a similar rental value”.
Rental market holding-up post Brexit https://t.co/TIXII4dmXi
— LandlordZONE (@LandlordZONE) August 31, 2016