Mike Collins Mortgage Broker a financial and property planner is ahead of the curve when it comes to renting. He said that if you are already a landlord, the main decision for this year is whether to expand or decrease your portfolio.
“Interest rates have risen, taking many from the mortgage market, and with a complete shortage of affordable housing, this places private landlords in a position where they might be forced to accept tenants out of necessity, rather than choice.”
The UK’s continued housing crisis has made it difficult for landlords to function well. According to the English Housing Survey the number of private landlords increased from 3.1million in 2008 to 4.4million in 2020. This is equivalent to one fifth of all homes.
The mini-budget has brought higher mortgage rates to the table, as the cost of living crisis is in full swing.
However, landlords who own buy-to-let properties (BTLs) are the most directly affected by the government’s legislation and high rates. Many have been forced to leave. Tenants are also being hit hard by spiralling rents, some of which are in poorly managed properties.
In such a weak market, is it a good time for landlords? Mike Collins explains.
Government rules
Landlords have been less successful due to a variety of government “interventions”. These include increased stamp duty rates in 2016 as well as the removal of tax relief for mortgage interest.
Legislation was passed that required landlords to have their properties achieve an EPC rating at least C by 2025 in new tenancies, and 2028 in existing agreements. The rules prohibiting evictions without cause are also important.
Unregulated lending
Unregulated lending is a big part of the bridging borrowing market. Many landlords use cash to invest and make purchases. The UK’s aging population may make BTL less appealing and cause unregulated bridging land to suffer.
According to the government, more than 25% of the UK’s population will be over 65 by 2043. This means that a lot of downsizing will likely occur. We all know how popular short term loans are in a market where housing prices move quickly.
Keep up to date with the legislation
Paul Conway designed Yuno, which is a property technology platform that helps landlords keep track and update on changing legislation. He believes that landlord regulations change approximately every nine days. Many landlords claim that recent or upcoming changes are the main reason they sell up.
Cash reserves
Although it may seem easy, being a landlord requires more than just buying a property to rent and then sitting back. It’s not easy. You’ll need to put in some effort when dealing with residential property. You may feel overwhelmed at times, particularly with rent arrears and property damage, and eviction proceedings to consider. All this while money is tight.
You will need to repair and renovate your investment. If you are looking for passive income, this might not be the right option.
It is obvious, and experts agree on it, that rental growth will continue to be driven by an imbalance in supply and demand in 2022. If you are able to afford repairs and refurbishments, it is worth waiting or buying your first buy-to let if you find a great deal.
