Landlords rank somewhere between English football fans and politicians in terms of public regard. Love them or loathe them, however, they do have a rather unique perspective on that most British of obsessions, the property market. In London especially, landlords have been particularly battered of late by falling rents driven by Brexit and coronavirus lockdowns, but it could be that things are starting to look up. Unfortunately that’s bad news for the millennials still desperately hoping to get on the U.K.’s very steep property ladder. At this point I should disclose an interest, if only to establish my credentials as a minor authority on the subject. My wife and I are landlords, fully accredited and categorized as “professionals” by mortgage lenders. Furthermore, we manage the properties ourselves, which means we are in regular contact with a number of the people at the sharp end of the market, our tenants. So what does our “unique” perspective tell us about the state of the property market? Two things stand out. First, none of the young couples who had hoped to take advantage of the U.K.’s generous pandemic stamp-duty holiday has been able to do so. The temporary relief from the property transaction tax has only served to push prices further beyond their reach and risk appetite. As first time buyers they were already exempted from the duty on most purchases up to 300,000 pounds ($416,340). Extending that relief to all home buyers simply increased demand for the same limited supply of “affordable” property. Our tenants still classify themselves as “aspiring homeowners,” but they have scaled back their searches having been outbid on numerous occasions. The market is simply “too hot,” they say.
The second notable insight is that demand is returning in the London rental market with a vengeance. The double whammy of Brexit and lockdown caused a well-documented exodus of some 700,000 people from London in the year to February 2021. Rents in certain parts of central London are 24% lower than they were five years ago, reflecting the shift in favor of supply over demand.