Is it a good time to invest in property?
There is a severe shortage of rental properties in London with demand outstripping supply. With too many tenants chasing too few properties prospective tenants find themselves in a competitive marketplace, often paying more than advertised rates to secure a property, driving rents even higher. Landlords who are cash buyers or have low loan-to-value ratios would be best placed but with more buy-to-let mortgages on offer, investors can be tempted back to the market.
Is it worth investing in property?
Many property investors consider London one of the best cities to invest in long-term. This is because of the housing market stability and that property really holds value here. With high rents and fairly low interest rates (for now), the rental market does appear to be very attractive. Investors can benefit from high rents, as well as the rising house prices in the UK.
Why are rental costs so high?
There are just not enough rental properties to satisfy the current demand. According to figures released in December 2022, the number of homes available for rent is 40% lower than average. This is while the properties available for rent have reduced dramatically to 38% and demand is 46% higher.*
Are landlords in a better-off position?
With so many changes and increasing interest rates in the latter stages of last year, many landlords have hesitated before buying more property to rent out. Particularly those that have a mortgage. This is creating more opportunity for new property investors. To step forward on the buy-to-let mortgage ladder. As investors wait to see what happens with the rising cost of living, this could be a good time to invest in property as a new landlord.
More properties for buy-to-let
Spring always brings a fresh influx of new properties to the market as homebuyers and sellers get on the move. So, this is a good time to find a home that may make a great buy-to-let investment and with a little more room for negotiation. There could be landlords exiting the buy-to-let market, giving you opportunity to snatch a deal.
Renters Reform Bill
Get ahead of the incoming property legislation. The renters reform bill is due to kick in at the end of the year 2023. While it aims to improve rights for tenants, it offers a framework for landlords to address issues arising with tenants. So, in many ways, it’s a good thing and not to be feared by landlords.
Buy-to-let mortgage deals for landlords are better
More choices of buy-to-let mortgages are returning to the market, with some 2400 deals available.* This is a sure sign that the market is stable and strong with good levels of confidence, creating the perfect environment for long-term investment.
Tenants are renting for longer
It’s harder for many to get on the property ladder; people are choosing to rent over buy, deciding to invest in lifestyle instead of bricks and mortar.
The demographics of tenants are changing
The trend a few years ago was typically that younger people rented before they bought their first home. This has since changed, as we are now seeing more older tenants choose to rent. As a landlord, you are no longer pitching to a younger audience, creating yet more market sector opportunities.
Renting with bills included
According to Rightmove, tenants are searching for bills included in their search more than ever, and it is the most searched-for term in their property portal.**[Rightmove].
This is an exciting time to be a property investor. It’s time to move on from the days of making vast profits exceedingly quickly, as has occurred in the past few years. What replaces this is a more stable, lucrative market with better long-term prospects than ever before.
A better tenant-landlord relationship that is more clearly defined. And with a little more scope for finding a bargain, now is the time to get off the fence and invest in property.
*Generation rent
Posted on: 10 May 2023
