Nationwide has reported a 2% rise in house prices through August, prompting many portfolio landlords to seriously consider lightening their load and giving themselves a much needed cash injection.
Who can blame them?
One or two less buy to let properties means one or two hundred less problems for a landlord, especially as they continue to endure the extensions and complications of the covid legislation.
The reasons for the rise are clear…
Firstly, lockdown has forced lots of people to consider their current housing situation, with many realising a need for more space, both inside and outside. This creates a demand, and as we all know, if the demand outweighs the supply, as it appears to in many areas, house prices are pushed up.
This could prove too tempting for many landlords who have been teetering on the brink of selling up.
Secondly, a lack of leisure activities, foreign holidays and travel costs have meant that some UK households have been able to save money over lockdown, allowing them to look at buying a bigger house, or a home in a more desirable area.
Again, this creates demand, and where there is an imbalance between that demand and the supply – the house prices go up.
Landlords will be seriously considering contacting their estate agents. Many already have.
What will be particularly interesting to see, is how long this will last…
…as with the furlough scheme about to hit a brick wall, unemployment is likely to be on the rise again, and so this mini boost in house prices might not last forever.
For landlords, this might mean that now is the perfect time to sell, before the situation changes again.
Many will look at this as a golden opportunity to get rid of the headaches and stresses that have come with having to be sympathetic and understanding for the last 6 months. An opportunity to rid themselves of the problems regarding eviction suspensions and collecting rent that might never come.
They’ll have to get the tenants out first of course, and they will (eventually) but this whole experience has been so off putting for so many landlords, that a great number of them are now looking to sell, as soon as possible.
In the long term, as we’ve been warning now for months now, this will create a huge shortfall in the availability of affordable rental properties.
There simply won’t be enough privately owned rental properties to accommodate those who need them.
And remember, not everyone has managed to save money during lockdown.
For millions of people, lockdown has meant unemployment, mounting debts and a rapid spiral into financial insecurity.
In order to get their lives back on track, these people, some of them vulnerable, will need access to affordable, compliant and safe rental properties.
Where will they be?
‘Sold’ is what the signs will say on the street, and you’ll have to search a whole lot harder to find the ‘to let’ signs anywhere.
Can the rental market be saved?
The implications are significant, whether you’re a landlord or a tenant.
A 2% rise in house prices could be a little too tempting for landlords, and we can’t say we’d blame them for opting out, and cashing out.