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The main talk this week in the general news has been the latest figures that show in April the UK economy shrunk by 20.4%. These figures are stark but not a surprise. it needs to be taken into consideration that the majority of the country was fully locked down along with businesses unable to operate so there was bound to be a big impact. The Bank of England has come out to say that they are ‘ready to act’ to help the UK economy weather the coronavirus storm. There have been reports that interest rates could drop to 0 or below. This would be good news for property investors that would look to utilise the unprecedented and even lower cost of borrowing in the UK.

In more positive news, the lettings market seems to have rebounded very well and seen a surge in demand. Plus, the Government has indicated that in response to the coronavirus pandemic, Stamp Duty could be reformed as part of tax changes. When questioned about considering the merits of introducing a Stamp Duty holiday, the financial secretary to the Treasury,  Jesse Norman, answered on behalf of the chancellor and stopped short of ruling out such change.

Further property news from this week:

  • Lettings demand 40 per cent higher than five-year average – According to Knight Frank, the lettings market has bounced back to life in the four weeks since the property market was opened back up for business. Demand from new prospective tenants was 40% above the five-year average and the second-highest in 2020. They anticipate the demand to continue getting stronger once there is more certainty over how universities will be teaching next year. Tenant viewings were also 1% higher than the five-year average and Knight Frank reports that the sales market is taking longer to rebound with buyer viewings 26% lower than the five-year average.
  • The rise and rise of PBSA – growth continues despite Covid-19 – StuRent says Private PBSA is currently anticipated to grow by 5.7% year-on-year whilst university accommodation is set to only increase by 1.1%. It seems that investors are increasingly looking at more stable investments by looking at alternative sectors such as purpose-built student accommodation. Mistoria Group has seen demand for student property in the North West rise by 8% year on year. Investors that purchase PBSA units can benefit from assured net returns between 8-10%. The high demand for student accommodation has been consistent and continually increasing with constant shortages of bed spaces which have made it a stable investment for companies and thus investors as well.
  • Investec funds £12.3m acquisition of Clapham Junction Buy-to-Rent scheme – The strength of the UK property market is further highlighted in this recent acquisition by Investec. A purchase of this magnitude in the current economic circumstances shows that domestic and international investors recognise the strong fundamentals of the UK property market.
  • How much does it cost to rent in London’s ‘walk to work’ hotspots? – They say when it comes to property that it’s all about ‘location, location, location’ and in the new research from Howsy this is definitely the case for London. The firm looked at the cost of renting across 20 areas of London that offer a stroll into the City of London taking an hour or less and found that across these 20 locations the average cost of renting is £2,001; 18% higher than the current London average. The current tenant demographic for city rentals continue to show that they want amenities and work locations on their doorstep and will certainly pay more for the luxury. This is why we have seen the emergence of new developments offering luxury facilities such as gymnasiums, rooftop terraces, concierges and cafes to entice buyers and tenants alike.

See you next week.

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