There are encouraging signs in the buy-to-let market that it is making a recovery since the housing marketing opened up at the beginning of May with the return to visual inspections in England. Since then we have seen a flurry of activity from lenders as they reassess their buy-to-let mortgage propositions in response to greater demand and competition. This has resulted in more products being offered, better rates, higher LTVs,increased maximum loan sizes and many other criteria tweaks that reflect the growing confidence among both lenders and landlords.

There are other factors that have come about as a result of Covid-19 that may also help the buy-to-let sector to rebound and provide a boost to mortgage business for intermediaries. The temporary change to stamp duty on properties valued up to £500,000 was predicted to create a surge in buy-to-let purchase applications and there is evidence that this has started to happen since the measure was announced in July.

At our business, since the end of July, the percentage of enquiries about mortgages for buy-to-let purchases has risen to around 72 percent compared with just below 50 per cent during the month of June. This is a significant change and indicates a renewed level of purchase activity from landlords. A recent poll carried out by Cherry, a mortgage adviser forum, showed that over half of brokers had experienced increased buy-to-let business with nearly 30 per cent reporting an increase in individual purchases and 27 percent reporting an increase in limited company purchases.

There is clearly a pent-up demand from landlords who may see now as the perfect time to expand their portfolios and take advantage of good opportunities with more properties available on the market and vendors eager to make a deal. The pandemic situation has also curbed people’s spending and provided an opportunity to save over the last 5-6 months, savings which could now be used as deposits for new property investments. With savings rates so low – around 40 per cent of easy access accounts are earning 0.1 percent or less - investing in property may be an even more attractive option; Halifax reported an average rise in property values of 1.6% in the month of July.

As the coronavirus remains in the UK and as the economy tries to recover, the number of income and job losses has been staggering and the damaging effect on many people’s livelihoods is hard to witness. It is difficult to predict how the next 6 months will unfold and what new job opportunities will develop for those looking for work. It may result in people becoming more mobile and perhaps relocating to new areas to gain employment. This could increase demand for rental accommodation from new tenants including those who don’t want to commit to purchasing property in a different area.

Covid-19 has had a dramatic effect on UK workplaces with an increasing number of staff working from home. This trend may become the new norm as businesses recognise the potential benefits of home working. This may also impact on the type of properties that tenants require – perhaps seeking extra rooms to accommodate a home office.

What is clear is that as we recover from the impact of the pandemic, tenant demand for rental property remains strong and that landlords are keen to grow their property businesses.

Chancellor Rishi Sunak unveiled a range of packages to help the economy in his Summer Statement in July, with particular support for the housing market. Two elements will be of particular interest to landlords – a Stamp Duty Land Tax reduction and new Green Homes Grants for home improvements.

Let’s look at the implications of both.

Stamp Duty Land Tax

The Chancellor announced that he was raising the Stamp Duty threshold on residential property transactions from £125,000 to £500,000. This will run from 8 July 2020 to 31 March 2021 and means that home buyers purchasing a property up to £500,000 will pay no Stamp Duty.

For buy-to-let landlords, the 3% surcharge introduced in April 2016 remains, so whilst they will see their Stamp Duty bills reduced, it’s not as good news for homebuyers.

Before, landlords would pay 3% SDLT up to £125,000 of the property’s value, 5% between £125,000 and 8% between £250,000 and £925,000. Between now and 31 March next year, landlords will pay a flat 3% of the transaction value up to the £500,000 threshold.

Our analysis shows that this will typically benefit those landlords in Southern regions more as property prices are higher in those regions, particularly London and the South East.

Prior to the Chancellor’s Stamp Duty announcement on July 8, a landlord buying a property in the North West at Paragon’s 2019 average property price of £170,191 would pay £6,009 in Stamp Duty. A landlord in London buying a property at the average price of £578,167 would pay £36,253.

Following the Chancellor’s Stamp Duty holiday, the North West landlord’s Stamp Duty cost reduces to £5,105, with the London landlord’s tax bill falling by £15,000.

Hamptons International has calculated that the average SDLT bill paid by buy-to-let investors across England will fall from £7,120 to £2,400, a reduction of 66%.

Green Homes Grants

The Chancellor also unveiled a scheme to help homeowners and landlords improve the energy efficiency of their homes and support the UK to become carbon neutral by 2050.

The Government will introduce a £2 billion Green Homes Grant, providing at least £2 for every £1 homeowners and landlords spend to make their homes more energy efficient, up to £5,000 per household.

For those on the lowest incomes, the scheme will fully fund energy efficiency measures of up to £10,000 per household. In total, ministers say this could support over 100,000 green jobs and help strengthen a supply chain that will be vital for meeting our target of net zero greenhouse gas emissions by 2050. The scheme aims to upgrade over 600,000 homes across England, saving households hundreds of pounds per year on their energy bills.

The Green Homes Grant will cover a variety of energy saving home improvements. Whilst a comprehensive list has not been released just yet, some of the confirmed improvements are wall and roof insulation and double glazing.

Although full details have yet to be released by the Treasury, applications are expected to be open from September.