Financial and property planner, Mike Collins is ahead of the game when it comes to the rental market. “If you’re already a landlord and planning ahead, your main decision this year will be whether to increase or reduce your portfolio,” he said.
“Interest rates are soaring, taking many out of the mortgage market and with a complete lack of affordable housing, this puts private landlords in the position where they may be forced to take on tenants out of necessity rather than choice.”
With the ongoing housing crisis, the UK functioning well is largely dependent on landlords. According to the English Housing Survey, the number of private landlords has increased from 3.1 million in 2008, to 4.4 million in 2020 – that’s equivalent to one in five homes.
And with the cost of living crisis in full swing and drastically affecting many people across the country, the mini-budget means higher mortgage rates have arrived.
But the group most affected by government legislation and staggering rates are buy-to-let (BTL) landlords – and it’s causing many to pack up. Meanwhile, the situation is also harsh on tenants who are being charged spiralling rent – some in badly managed properties.
But in such a broken market, is now a good time to be a landlord? Mike Collins explains.
Government rules
Various government ‘interventions’ have made life less profitable for landlords. Some of these include higher stamp duty rates in 2016 and removal of mortgage interest tax relief in 2017.
More recently there was legislation that would mandate landlords to ensure their properties reach an EPC rating of at least C by 2025 for new tenancies and 2028 for existing agreements. Not forgetting the rules banning ‘no fault’ evictions.
Unregulated lending
With landlords a major player in the bridging borrowing game, a lot of unregulated lending goes on, with many landlords using cash to make investment purchases. If BTL becomes much less attractive and unregulated bridging lands suffer, the UK’s ageing population could mean an uplift in regulating bridging.
The government predicts than one quarter of the UK will be over 65 in 2043, which means a lot of downsizing is likely to happen – and we all know how popular short-term loans can be in a housing market that moves fast.
Keeping up with legislation
Yuno, a property technology platform designed to help landlords keep track of changing legislation, has been designed by Paul Conway, who believes that regulations for landlords change every nine days on average. Many landlords say recent or forthcoming changes are their main reasons for selling up.
Having spare cash
It may seem like a walk in the park but being a landlord is not a case of buying somewhere to let and then sitting back. Far from it. With residential property, you’re going to need some effort. At times you may feel incredible stressed, especially with rent arrears, property damage and eviction processes to consider – and all at a time when money is incredibly tight.
Your investment is also going to require repairs and refurbishment – so if it’s a passive income you’re after, it might not be for you.
What is clear and almost experts will agree, is that an imbalance of supply and demand will continue to fuel rental growth in 2022, and so if you can cope with repairs and refurbishments, it’s worth hanging in there or purchasing your
