The value of buy-to-let

The value of buy-to-let

Richard Rowntree is managing director mortgages of Paragon Bank

Despite the pandemic’s emergence in 2019, it is 2020 that will go down in history as the year changed by coronavirus.

I’m sure that we will talk about pre and post-COVID in a similar way to how we reference the financial crisis, but the lasting changes will be even greater. The impact on society was previously unimaginable, and focusing on the property market, it will likely shape preferences for generations.


We have read a lot about the demand pent up by lockdown, but there is also evidence to suggest that it goes further back. Analysis carried out by Zoopla back in 2019 showed that we remain in a property for an average of 21 years. This increased to around 30 in areas of London and the South East where the higher property prices meant stamp duty was more of a barrier compared to elsewhere in the UK.

These findings supported a 2017 report by the Council of Mortgage Lenders which looked at factors for a steep decline in homemoving over the previous three decades.

The authors highlighted stagnation among rates of mortgaged movers, and government policies that were primarily focused on stimulating the first-time buyer market.

The introduction of the Help to Buy scheme has seen a rise in the number of first-time buyers, who accounted for 81% of the 263,297 properties purchased with an equity loan between 1 April 2013 and 31 December 2019.

Aided by the ‘bank of mum and dad’, first-time buyers have bought larger and more expensive homes, reducing the need to move from starter homes. The consequence is that mortgaged homeowners have become progressively older and have a lower propensity to move as a result.

At least in the short-term, the pandemic seems to have changed this, providing a once in a generation opportunity to reassess what we want and need in a home.

Research has highlighted some shifting priorities that can be directly linked to COVID-19, with things like gardens and space for home offices becoming more desirable to movers. Where our homes are located has always been important, but we must also ask if the pandemic will cause any changes in where we choose to live.


An Office for National Statistics (ONS) comparison of census data and the findings of the Business Impact of Coronavirus Survey unsurprisingly confirmed the expectation that the pandemic would lead to major changes in commuter travel patterns.

With the necessity to work from home minimising the need to live close to centrally located offices, some city dwellers have eyed moves to smaller towns and more rural settings. Here, prices can be lower than central areas, and properties can benefit from more access to green space.

Alongside the relisting of holiday lets, left empty as restrictions stemmed the flow of tourism, this may be a contributing factor to the two-speed market that we have seen emerge – namely high demand in all regions except in London, where flats in particular have fallen out of favour, with Q3 seeing upwards of 40% more available compared to 2019 levels.

It is important to realise we have certainly seen changing attitudes to where we call home, but it is not an entirely new phenomenon.

Again, using London as an example, ONS figures show us that even before COVID-19, in the year to mid-2019, the population grew by 54,000, representing the smallest increase since mid-2004. The data shows that moves tend to be determined by age, with people in their 30s to mid-40s, along with their children, most likely to leave the capital.

While this churn is likely to be more pronounced in London, it is not exclusive, as we see many of our biggest cities swell and contract, influenced by the lifecycle of their residents rather than their geography.

This cyclical process is fuelled by an inflow of people drawn to all that cities offer, replacing those who wish to settle down after starting families.


The private rented sector is well placed to respond to this, because it offers some of the most affordable and flexible housing solutions.

During these uncertain times, these are both valuable characteristics, giving those that do have plans to buy the option to save more while they wait and see how things such as furlough and the stamp duty holiday pan out.

As well as responding to the type of transient market conditions we saw last year, through understanding the needs of a diverse mix of tenants, landlords can provide a valuable facet of the UK’s housing supply long-term.