If you’ve got a little bit of money to invest, then the idea of owning and letting out your own property might appeal. 2023 looks set to be an interesting time to enter this market, since major changes in capital gains, and extra protections for tenants, are in the offing in Westminster.
It’s a good idea to make yourself aware of these changes, as well as the state of the existing industry, before you start buying to let. Let’s run through a few of the more significant points to consider.
Increased mortgage rates
In response to an ongoing inflation crisis, the Bank of England has hiked interest rates repeatedly, with the result that new house purchases have become more difficult to finance. This applies to landlords – but it also applies to homebuyers, too. As such, the demand for rental properties might be strong enough to offset your costs. Be prepared for further fluctuation in the coming year.
The renter reform bill
Last year, the government announced its intention to ‘shake up’ the rental sector through new legislation – called the ‘Renter’s Reform Bill’. It aims to introduce a range of reforms, including a ban on section 21 ‘no fault’ evictions. The upshot of this is that many of the existing advice will be made obsolete. As such, it’s a good idea to make yourself aware of all of the changes going through. In Wales, the law has already changed.
Gauging demand
When you’re looking to buy, it’s important that you’re aware of where the demand is going to be strongest. There’s no point, after all, in buying a house that no-one wants to rent. Polling by money.co.uk has revealed that Chorley, Selby, Rishmoor, Mid Devon and Dartford all enjoy buyers who are less willing to compromise on a purchase.
Before you invest, it’s worth visiting an area in person, to get a feel for it. Some are more easily accessed than others. You can catch a train down to Dartford for a weekend’s break, and make research a secondary objective.
Look for bargains
House prices have been steadily climbing for years, but the direction of travel may well reverse in 2023. If you’re willing to play hardball, then you might well pick up a bargain in a slowing market. If your offer is turned away, then don’t assume that you’ve missed out on a property – it might be that slowing demand plays into your hands. Come back later to see what’s changed.
Energy Efficiency Rules
In other to meet its targets on emissions, the government will seek to push landlords to make improvements to their properties. This means that, from 2025, new tenancies will need an energy rating of at least ‘C’. Existing ones will need to have made the same improvements by 2028.
