All sectors of the mortgage market have been forced to modify their approaches during this period and it’s important to understand the effects of the pandemic, learn from them, adjust accordingly and move forward.
Confidence appears to be growing
In terms of the impact on the BTL sector, the recent Q4 2020 landlord panel research from BVA BDRC highlighted that whilst the coronavirus pandemic will inevitably affect many landlords in some shape or form, confidence appears to be growing. In the Q4 data, only 39% of landlords reported that Covid-19 related issues have affected their rental portfolio, down from a figure of 46% in Q3.
This overall decline in covid-related issues is suggested to be driven by slight falls in those impacted by reduced rental income (-3%pts) and in those experiencing void periods (-4%pts). Larger landlords continue to have the greatest exposure to covid related property issues; Six in 10 landlords with 20+ properties have seen an impact on rental income as a result of the pandemic, with around three in 10 experiencing an increase in void periods.
Landlords with large portfolios hit the hardest
Breaking this down, landlords with the largest portfolios continue to be hardest hit with 57% of those with 20+ properties reporting a fall in income due to the pandemic (although this is down from 66% in Q3). Leveraged landlords also remain more impacted than their unencumbered peers, with around half of those with BTL borrowing seeing income reduce vs. 36% of those who don’t borrow.
Challenges remain for many landlords but, as we’ve seen from the volume of purchase business in recent months, large numbers are still looking to add to their portfolios. And looking forward, opportunities will continue to present themselves and the value of the advice process is only set to rise further.
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