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Moving on up: The UK's residential market

This article is brought to you by Arbuthnot Specialist Finance Limited (ASFL), the short-term property finance arm of Arbuthnot Latham.


20th August 2020


With economies around the world suffering from the impact of a global pandemic, there has been much focus on how to navigate the working environment and the continuation of services at such a challenging time. As the short-term property finance arm of Arbuthnot Latham, the property market is of vital importance to us; the current climate, predictions, opportunities but more importantly how we can best provide our services to clients seeking to navigate through those elements.

As the short-term property finance arm of Arbuthnot Latham, the property market is of vital importance to us; the current climate, predictions, opportunities but more importantly how we can best provide our services to clients seeking to navigate through those elements.

Data from Nationwide Building Society shows that house prices across the UK fell month on month, following the implementation of strict lockdown measures and social distancing in March of this year. Prices in June dropped 1.4% month on month, after sliding 1.7% in May —the biggest monthly drop in 11 years.¹ This was the first time since 2012 that UK house prices have fallen. However, following the lifting of some lockdown restrictions, house prices were reportedly up 1.5% in July,² showing again the resilience of the sector and how residential property tends to bounce back before other property sectors. 

While there are some striking differences, parallels can be drawn between the current situation and the Global Financial Crisis (GFC); both were global concerns that saw unemployment levels rise, house prices drop, and businesses foreclose.  

Although COVID-19 continues to have devastating consequences, there is data to suggest that the impact on the residential property market will not be as negative as the GFC.  

At the peak in 2009, residential rents dropped by 2.2%.3 Property values also dropped 16.53% from 2008 Q1 – 2009 Q1, the largest drop since records began, before recovering by 8.8% by March 2010.4

This compares to the forecast of property agent Savills, who predict that rental incomes will only fall by 1.5% this year, followed by a 5.5% rise.5 Savills also predicts a 7.5% house price drop this year,6 a figure that is less than half of the drop from 2008 to 2009. While COVID-19 has undoubtedly had a negative impact on the rental market, the outlook may not be as bad as many expected.  

The housing market received a jump-start in mid-May when lockdown measures eased, although transactions were slow due to the pent-up demand. By the third quarter of 2021, Savills believes that transaction levels will be back to where they were expected to be pre-COVID-19. Following Nationwide’s July house price index report (noted above), Savills prediction looks to tell a realistic story.

Similarly, property agent Knight Frank recorded a surge of activity as lockdown measures started to be lifted,7 with more offers placed on residential properties. However, it is worth noting that the demand seen currently reflects home buying appetite rather than ability.

There is even more reason for optimism. Though revised down from 15%, Savills has predicted that the UK will see house prices grow 5% from 2019 to 2024,8 meaning that there are possible gains to be made for those who buy sooner rather than later.

How we can add value to your property portfolio

Being a specialist finance lender, we offer a range of funding solutions that can help to add value to your residential property portfolio. Our Residential, Light Refurbishment and Heavy & Conversion Refurbishment products are available to help with your residential property needs.

Residential Investment

Our Residential Investment product is suited to support borrowers in need of finance to purchase or refinance residential investment properties, BTL and HMOs. We are also able to offer Joint Legal Representation on vanilla projects, allowing one lawyer to act on behalf of both the lender and borrower. For facilities up to 50% LTV we can offer an Automated Valuation (AVM), which allows us to prioritise the safety of our colleagues, valuers and clients as we operate in a world of social distancing.

Light Refurbishment

This covers refurbishment projects where there will be no structural changes, but a refurbishment will add significant value to the property.

Heavy Refurbishment & Conversion

Our Heavy Refurbishment & Conversion product is available to help fund PDR conversions and projects including structural changes or extensions to residential properties.
All our product offerings are clear and transparent, having no exit fees, early repayment or default charges, making it easy to understand the total cost of the facility at the outset.

Arbuthnot Specialist Finance’s Product offering


*Residential Investment Light Refurbishment **Heavy & Conversion Refurbishment
Maximum LTV Maximum LTV Maximum LTV
65% for single units valued up to £500k, or portfolios of 5 to 10 units valued up to £5m

60% for single units valued above £500k
65% 60%
65% 60%
Pricing Pricing Pricing
From 0.6% PCM From 0.65% PCM From 0.75% PCM
Arrangement fee Arrangement fee Arrangement fee
Up to 2% Up to 2% Up to 2%
Valuation Valuation Valuation
Full Redbook Valuation above 50% LTV Full Redbook Valuation Full Redbook Valuation


*AVM acceptable up to 50% LTV (maximum property value £1m inside the M25, £500k outside the M25)

*Joint Legal Representation for facilities up to £1m

**Extensions must be no larger than 40% of original floorplate.

Contact our expert team to hear how we can add value to your property portfolio.

Tel: 0161 694 0059

1 Coronavirus: UK house prices see first annual drop since 2012
2 Nationwide’s House Price Index
3 How UK residential rents behave in a downturn
4 House Price Calculator (Nationwide)
5 Record High for Private Rents During COVID-19 Lockdown
6 Savills forecasts 7.5% price drop in 2020
7 Record after record! Agency sees activity surge but doubts remain
8 Spotlight: Revisions to our mainstream residential market forecasts

Registered in England and Wales No. 11103603. Registered Address: Arbuthnot House, 7 Wilson Street, London, EC2M 2SN. Arbuthnot Specialist Finance Limited is not authorised and regulated by the Financial Conduct Authority.