The financial climate has made things very challenging for investors in the property market.With increasing interest rates, a demanding regulatory environment, ongoing political uncertainty and a continuing crisis in the energy supply sector that is biting all members of society -it isperfectly reasonable that some landlords may be thinking of leaving the rental market.
As we adjust to a higher rate environment and face down the barrel of a recession, what can But with the threat of a yearlong recession ahead, is there anythinglandlords can do not just to survive, but actually thrive in this arid environment?
Optimizing your potential yield is paramount
With rental yields varying considerable across the country, this may be the time to consider shifting your property holdings to another region where the yields are growing at a greater rate.While rents in the Southeast and London continue to lag behind, other areas, such as the Northeast and Scotland, are currently moving into the top spot for rental yield.
Areas with high student populations are also experiencing a greater demand for rental properties. Converting living rooms and attics to increase the number bedrooms, can also work to increase the potential yield from a property.
There are of courseother ways to increase your yield. You can buy cheaper properties or increase your rental charges. With the average borrower struggling to finance a home purchase, property values are predicted to fall over the year ahead. At the same time, demand for rental accommodation remains high so that the market can absorb quite substantial increases in rents.
Buy at Auction
After the heady days of rising prices during the height of the pandemic, the housing market is set to see the average value of properties fall a whopping ten percent.
Buying at auction is a cost-effective way to add to your rental portfolio. Although cheaper properties may require a bit more work to bring them up to the required standard, the big bonus is a cheaper mortgage.
Auctions are no longer the private domain of builders with shed loads of spare cash. Bridging loans are the perfect mechanism for buying and renovating properties brought at auction.
Refinancing your portfolio
How are you financed? Landlords who are making high payments on one property and low payments on another can release equity on one to refinance the other, to achieve a lowerloan to valueratio(LTV), and therefore obtain a lowerrepayment rate.
As market conditions changed on a daily, landlords would do well to call for the assistance of a professional property broker. A known and trusted broker,who has their finger on the pulse, would be able to advise a landlord how and when to refinance their portfolios.
Consider disused commercial properties
Recent amendments to permitted development rights have made buying and converting commercial to residential propertymuch more convenient.
A, commercial property is typically valued lower than residential property, so converting a high street premises to flats, brings with it a substantial increase in market value.
Paul Elliott,from Propp, a specialist property comparison site said. This is a great way to manage cashflow and grow your portfolio quickly,as you can sell one flat to release equity for your next project, while retaining the other for rent.”
What do higher buy-to-let mortgage costs mean for the rental market?
With all the doom and gloom of raising interest rates, it might seem that now is the time to pull out of the rental market all together. But as the old adage says: every cloud has a silver lining. With many people struggling to get on to the property market, now is a good time for the established investor to increase their rental portfolios.
Will property values falling and rents rising, this is indeed the time, not just to survive, but to thrive.