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Let to buy is worth mentioning to clients considering a move out of the city – Adams

by: Paul Adams, sales director at Pepper Money
  • 28/05/2021
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Let to buy is worth mentioning to clients considering a move out of the city – Adams
There have been plenty of reports about how the Covid-19 pandemic is changing the places that people choose to live, and, according to Rightmove, London is no longer the most searched for location for buyers, having been knocked off the top-spot by Cornwall.

 

The property website has actually recorded over 200 of its busiest ever days since the housing markets reopened across England, Wales and Scotland in May and June last year, so the trends it reports on represent a considerable swing in activity.

Rightmove says that when looking at the second half of 2020, annual sales agreed grew by 69 per cent in rural areas, compared to 49 per cent in urban areas as more people looked to escape to the country.

There has also been an increase in people who currently live in a city enquiring about property outside of that city.

The biggest shift has been in London where the latest results show 52 per cent of Londoners enquiring outside of London compared to 39 per cent this time last year, but the trend is the same across all 10 of the UK’s biggest cities.

Multiple lockdowns and the prospect of increased working from home have clearly made rural living seem more attractive, but moving to an entirely new area or different way of life does not always turn out as intended.

So, what happens to those customers who move out of a big city, only to decide they want to return in the future?

If demand for city locations rebounds, which is likely, and property prices start to increase faster than rural areas, home movers who had previously escaped to the country might be in a position where they struggle to move back to a suitable property in an urban location.

However, there is a way that you can help to protect against this possibility from the outset. For customers who want to make a big move, they may want to consider holding on to the property they are moving out of, to let to tenants. That way, they have a safety net if they ever decide to move back and if they are happy with their new life, they can continue to earn rental income for as long as they wish, as well as enjoying the potential capital growth.

With let to buy, home movers can remortgage their existing home to raise a deposit for a new home purchase, which they can then fund with a normal residential mortgage.

There is certainly demand from customers for this type of solution in the current environment, and it’s an option that is worth mentioning to customers who can’t decide whether to commit to a big move.

There are considerations, of course, such as the stamp duty surcharge on second properties and the potential tax implications of becoming a landlord, but let to buy can provide customers with greater flexibility and a potentially excellent investment.

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