With the buy-to-let market becoming an increasingly uncertain environment, it is not hard to see why potential investors are feeling cautious in the wake of the pandemic.
Research has been published that goes back in time to the last major global event that brought the property market to its knees, the 2008/2009 recession, and analyses how things have changed since then.
A report published by build-to-rent specialists Ascend Properties reveals which areas of the English rental market have performed the strongest since the 2008 “credit crunch”. The research revealed that the average rent in England fell from £699 in 2008 to £678 the following year. Fortunately, following the end of the property crash, the market has seen a steady recovery, with average rental income increasing by 20% to £814 in 2020, despite the effects of the COVID crisis.
But these are just ‘average’ figures. The picture looks quite different when looking at individual regions, with some areas experiencing much stronger rental income recovery than others.
London has seen a huge average rental increase of 68%, with the average rent increasing from £977 p/m during the recession to an incredible £1638 in today’s rental market.
The second-highest increase in rental income was seen in the South East, with an increase of 38%. Followed by the West Midlands at 25% and the East Midlands at 23%.
Increases of 19% were seen in the East of England, with other regions close behind with rises of 17% in the North West and South West and 11% in Yorkshire.
Coming in last place, with an average rental income of £607, is the North East, with an increase of 10% since the economic downturn of 2008.
Managing Director of Ascend Properties, Ged McPartlin, commented:
“It’s fair to say that pandemic uncertainty may have caused hesitation for some when looking to invest within the rental market, particularly in areas such as London where demand has dropped due to the enforced trend of working from home.”
“However, while COVID uncertainty has created a tricky landscape in some respects, we remain a world away from the financial crisis of 2008, and many remain reliant on the rental sector in order to live.”
“It also remains clear that, much like the wider housing market, any periods of instability are relatively short-lived, and we’ve seen strong and consistent growth across the board as a result.”
“For the professional investor who may be worried about a potential bump in the road, the build-to-rent space could be the best route to help mitigate any concerns. Not only does the sector provide a higher rental premium to begin with, but the lifestyle offering it provides attracts those with a longer-term view to renting. As a result, residents often rent for far longer terms than the traditional 12 months, providing a more stable stream of income and fewer void periods.