Mike Collins is a leading financial and property advisor in the area of the rental market. “If you are already a landlord and plan ahead, your major decision this year will involve whether to increase your portfolio or decrease it,” Collins said.
“Interest Rates are rising, taking many out the mortgage market, and with an absolute lack of affordable housing this puts private landlords into the position whereby they may have to take on tenants out-of-necessity rather than out of choice.
Due to the ongoing housing crisis, the UK is heavily dependent on landlords for its continued success. According to the English Housing Survey (EHS), the number private landlords has increased to 4.4 million from 3.1 million in 2008 and 4.8 million in 2020. That’s roughly one in five homes.
With the cost-of-living crisis in full swing, which is affecting many people across America, the mini budget has seen higher mortgage rates.
The most adversely affected by the government’s legislation and high rates are landlords of buy-to–let (BTL), and many are packing up. The situation is worse for tenants, who are being charged spiralling rent in some poorly managed properties.
Is it now a good moment to be a landlord in this market? Mike Collins explains.
Government rules
Landlords are less financially able due to various government interventions. These include higher stamp duties rates in 2016 and the elimination of mortgage interest tax relief.
Recent legislation required landlords that their properties have an EPC rating of C or higher by 2025 for new tenancies. This is in addition to the 2028 requirement for existing agreements. Also, the ban on evictions without cause is not to be forgotten.
Unregulated lending
The landlords are a key player in the bridging lending game. This means that there is a lot of unregulated lending. Many landlords also use cash to purchase investment properties. BTL could become less attractive as unregulated bridging lands suffer. The UK’s growing population could lead to a rise in regulation of bridging.
The government predicts that more than one quarter of the UK will reach 65 years old by 2043. This is a significant amount of downsizing. And we all know how popular short-term loan options can be in a fast-moving housing market.
Staying current with the legislation
Paul Conway created Yuno as a property technology platform to assist landlords in keeping track of changes in legislation. Conway believes that laws for landlords change about every ninety days. Many landlords believe that the reason for selling up is due to recent or future changes.
Reserve cash
While it might seem simple, becoming a landlord is more complicated than buying property and then sitting back. This is far from the truth. It will take effort to manage residential property. Sometimes you might feel extremely stressed at times. This is especially true if you have rent arrears or property damage to consider and eviction procedures to think about – all this during a time of tight budgeting.
Also, your investment will require repairs and refurbishment.
The fact that there will be an imbalance between supply and demand, which almost all experts agree, will continue to fuel rental growth through 2022. It’s worth sticking around or purchasing your first purchase-to-let if a deal is available.
