Many sections of the British economy have been severely impacted by the coronavirus pandemic. Unfortunately, lots of small businesses like bars, cafes and restaurants have had to close down as a result of the lockdown periods limiting the number of customers. This has then left a lot of people hesitant about what to do with their money with some uncertainty of what their working situation will be like. You could be forgiven for thinking that investing in property would be more of a risk during these times than ‘normal’, however, this is really not the case.

Of course you are faced with all the usual risks of property investment but there isn’t really anything on top of that. In fact, if you invest with Rockstar, we have shown that our model has proven to be even more successful in the last year than ever before…

Rental Value 

We sell all of our properties based on the rental value of the building. This can differ from what the brick and mortar cost of the property is. For instance, there could be two identical three bedroom properties within the same street. This would mean that the brick and mortar cost (price of the building) would be the same. If one of those houses has a family of four living in it then they may be paying their landlord £1,000* a month in rent. Let’s say that the other identical property gets purchased by Rockstar and we release some of the potential it has. We can create an extra three bedrooms, each with an ensuite bathroom. If you have already done the maths then you would know that this is now a six bedroom house. This helps to drive the rental value up because there are more rooms to rent within the property, even though it was originally an identical house to where the family of four lived. Six tenants living in a newly developed house will all pay a rental fee. The landlord (Rockstar) could charge each of them £500*, which would be a total sum of £3,000* a month from this house – a lot more than what the identical family house is bringing in. 

When it comes to selling the house, we do not just sell it as a house but we sell it as a business. New buyers love the idea that they can make £3,000* a month on a property when another landlord on the same street is only getting £1,000* This, of course, means that we can get substantially more as a selling price than what we bought it for.

You may be wondering how this relates back to the covid pandemic though? Well, the answer to that is simple. Fewer people have been buying houses as they feel as if it is more of a risk to purchase in these times, which has then caused a recession in market value for a lot of properties. With the demand to buy falling, the demand to rent has increased. This naturally has resulted in rental value increasing. As previously explained, we tend to sell our properties based on a rental value. So, you guessed it – the higher the rental value, the better chance of making profit, which then leads to more money that an investor can make.

*Example figures kept simple but they are realistic values as to what we deal with

Nothing Has Closed During the Pandemic

A big factor as to how property investment has largely remained unaffected by the pandemic is that the relevant businesses have mainly been operating their services as normal since May 2020. Other than a six week closure from mid-March until the start of May, estate agents were not ordered to close down at any point which has meant that most property transactions have largely been able to go through as normal. People have been able to conduct viewings on properties with social distance measures in place. Being able to operate as usual when many other businesses have been suffering has been a big plus for the property world. As well as this, removal firms have been allowed to operate too which has assisted the arrivals of tenants in the properties. 

All in all, the whole operation process has not really been impacted by the lockdown restrictions – thus allowing us to continue like normal.

Key Figures 

In 2020, rental value increased by 7.%.

The highest number of mortgage applications in a month since 2007 were approved in November 2020

Rightmove estimated that over 1,200,000 property sales will occur in the first six months of 2021

Over 715,000 mortgage applications were approved in 2020, despite the market being closed for six weeks in the spring. 

Rightmove is also predicting rental values to increase by 4% in 2021.

With prices being predicted to continue to rise, this is a perfect time to invest with us.