The year 2020 will go down in history as the year of coronavirus, lockdowns and staying at home. However, recently published data shows that 2020 was also a record-breaking year for landlord and tenant activity. The number buy-to-let (BTL) landlord companies that were set up over the year was a fresh high, while the number of tenant moves in London in December 2020, was double the number of moves in the same period of 2019.
News of a busy lettings industry is positive for the economy and Britons. Meanwhile signs of continued investment appetite shows that even though punitive tax changes have affected BTL investors in recent years, by using the right systems and structures it remains a profitable endeavour.
BTL Company Set Ups Surge
Companies House data from 2020 and analysed by Hamptons International, show that the most popular new businesses created in the UK were mail order/internet retail sales stores, with 43,200 of them newly registered. Close behind that with 41,700 newly registered businesses was BTL companies, representing a 23% rise from 2019. That increase means there are now a total of 228,743 registered BTL businesses in the UK, the highest number on record.
Looking at where the BTL businesses are registered, London and the south east of England account for some 47% in 2020. This is likely due to the higher price of property in the south when compared with the rest of the country, which means the tax benefits of creating a registered BTL business are also higher.
With so many new BTL businesses being registered its clear that landlords remain serious about staying in the industry, despite government tax changes and the growth of institutional investment in the industry through build-to-rent and other vehicles.
Lower Prices Encourage Tenant Moves
Further showing the growth of the UK’s lettings industry are separate figures, from estate agency Chestertons, that report a record level of tenant moves in December 2020. With home moves ruled out for some of the year amid the pandemic, a decline in rents across many UK regions combined with a desire for a change of scenery and lower outgoings resulted in double the number of tenant moves in London in December 2020 when compared with December 2019. Indeed, some 20% of landlords lowered their rents making a proportion of rental homes more affordable.
There was also a larger number of rental properties available in the English capital, likely due to weaker international demand amid curbs on travel, which was another contributing factor to the decrease in rents and increased activity.
This meant that December, which is usually the quietest month of the year, became busy. This was exacerbated by the lack of festivities and celebrations due to lockdown rules and saw a record number of tenant moves for the month of December.
This high level of activity in the lettings industry highlights yet again that the number of tenants in the UK is continuing to rise and also, that appetite among BTL landlords remains. In addition, the high number of tenant moves in December shows the industry continues to work well even during the pandemic when difficulties have arisen and stringent rules must be followed across the entire lettings industry. This is all positive for the sector and underscores to the government just how important the industry is and that support for it should continue, both during the pandemic and afterwards.