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Category: Property News

Why over 40% of landlords want to expand their property portfolios

by Alysha Taylor SmithPosted on

The property market has seen its fair share of challenges in recent times, from rising bills to a constant stream of government regulations. Landlords have had to navigate more economic uncertainties than they are used to. However, despite the challenges, a surprising number of landlords are feeling positive about the future and are even looking to expand their property portfolios.

According to a study conducted by lending service Landbay, over 40% of landlords have expressed their intention to grow their portfolios in the coming year. So, why are landlords considering expanding their property portfolios in 2023? 

Rising Utility Costs

Fluctuating temperatures contribute towards higher utility costs and tenants may rely more on electricity to cool or heat their living spaces, leading to increased utility costs for landlords and tenants alike. Higher temperatures can result in increased water usage, further burdening the electrical grid and city resources, thereby escalating costs. Landlords offering bills included should carefully consider the monthly charge to make sure that it covers expected usage. 

High Tenant Demand:

One of the key driving forces behind landlords’ willingness to expand is the sustained high demand for rental properties. As the number of potential tenants continues to exceed the available properties, occupancy rates remain high. A recent survey by RICS reported a 32% increase in tenant demand in just one month. This surge in demand has also reduced the average void period in England from 23 days to 17 days in February.

Potential Drop in House Prices:

Another reason contributing to landlords’ positive outlook is the possibility of a drop in house prices. Approximately one-third of respondents in the study cited this as a factor influencing their decision to expand their portfolios. Declining house prices may present an opportunity for savvy investors to acquire attractively valued properties, anticipating future price surges.

Opportunity for Higher Rental Yields:

While the property market may have been less lucrative than other investment avenues in recent years, there remains a silver lining for landlords. The opportunity to leverage properties using mortgages can substantially boost returns. As mortgage rates begin to stabilise and inflation eases, landlords can consider tracker mortgages with falling monthly interest repayments, supporting higher rental yields.

Lower market competition:

The private rental sector has witnessed a significant decline in available rental properties, with around 70,000 landlords leaving the market in 2022 alone. However, landlords who have weathered the challenges are presented with better opportunities to differentiate their properties and secure higher rents.

Rising Rents:

Rent prices have been increasing at their fastest rate in seven years, rising by 4% in 2022. This trend is expected to continue in 2023, with forecasts suggesting rents may rise by as much as 12.91% this year. The combination of rising rents and declining house prices may recalibrate rental yields to more attractive levels, encouraging landlords to remain in the market.

Amidst the uncertainties, some landlords see a window of opportunity to capitalise on the market conditions. Faltering house prices, coupled with rising rents, might offer attractive investment opportunities that confident landlords can seize.

While there are positive indications, not all landlords share the same optimism. Approximately 35% of landlords expressed a more neutral stance, citing concerns over government interference, negative stereotypes surrounding landlords, and overall market uncertainty. 

Despite this, a considerable proportion of landlords remain optimistic about the future and are eager to expand their property portfolios. High tenant demand, the potential for declining house prices, and rising rents are among the key factors fueling this positivity. While uncertainties persist, landlords who approach the market with confidence and strategic thinking may find themselves well-positioned for success in the coming years.

Reasons for new landlords to join the buy-to-let market

by Alysha Taylor SmithPosted on

The rental market is experiencing continued demand, with indications pointing to this trend continuing in the long term. With lower numbers of rental properties than potential renters on the market, the rental market is set to become even more competitive causing difficulties for young renters looking for suitable accommodation.

What do landlords have to gain from the current rental supply imbalance? 

Reduced Vacancy Periods

With a higher demand for rental properties, landlords can enjoy shorter vacancy periods. Properties are more likely to be rented out sooner, minimising the time properties remain unoccupied. This ensures a steady stream of rental income and mitigates the financial strain associated with prolonged vacancies.

Selective Tenant Screening

The growing demand for rental properties allows landlords to be more discerning in their tenant selection process. Landlords can carefully screen potential tenants, choosing those with excellent rental histories, stable incomes, and responsible behaviour. By selecting reliable tenants, landlords can minimise the risks associated with property damage and unpaid rent, ensuring a smoother and more profitable rental experience.

Increased Rental Prices

The competitive rental market resulting from rising demand empowers landlords to charge higher rental prices. As demand surpasses supply, landlords gain leverage to adjust rental rates to match market conditions. Higher rental prices enable landlords to maximise their return on investment and boost their profit margins, leading to increased financial stability and growth.

Expanded Profit Margins

The combination of shorter vacancy periods and higher rental prices contributes to expanded profit margins for landlords. By reducing the time a property remains unoccupied and optimising rental rates, landlords can achieve a more favourable return on their investment. These improved profit margins create opportunities for further property investment, property maintenance, and enhancement of rental offerings.

The increasing rental demand in the market has a positive impact on landlords in various ways. Landlords benefit from shorter vacancy periods, enabling them to generate consistent rental income. They can also be more selective with tenants, reducing the likelihood of property damage and rent arrears. Additionally, the competitive market allows landlords to charge higher rental prices, leading to improved profit margins. With careful management and adaptation to market trends, landlords can thrive in the evolving rental landscape. Additionally, as more landlords enter the market the supply and demand crisis will inevitably level out, causing positive knock-on effects for tenants. 

EPC regulations to be delayed until 2025

by Asif AliPosted on

Technical difficulties in the UK government’s Energy Performance Certificate (EPC) database have led to a delay in implementing new regulations for landlords in England. As a result, Landlords will not be required to make certain energy-efficient improvements to their rental properties until 2025 at the earliest. 

Why are EPC regulations becoming stricter? 

According to a recent survey, 90% of tenants believe that energy-efficient homes are essential, and 82% would be willing to pay higher rent for such properties. Additionally, poorly insulated and inefficient properties can lead to 21% higher energy bills, on average, for tenants. Furthermore, the carbon footprint of a typical rental property is 19% higher than that of an owner-occupied home.

Despite the delay in new EPC regulations, Landlords should take steps to improve the energy efficiency of their rental properties as soon as possible. Making energy-efficient upgrades can save an average of £350 a year on energy bills, and upgrading from an EPC rating of D or E to an A or B can add an average of £16,000 to a property’s value.

The most common ways to improve a property’s EPC rating include:

  • Adding (or improving) loft and wall insulation
  • Replacing older boilers for more sustainable alternatives. (This may also save you from costly boiler repairs). 
  • Installing solar panels or alternative methods of creating sustainable energy within the rental homes. 
  • Ensure that glass in your properties is double glazed to improve energy efficiency. 

It is vital to note that the delay in implementing new EPC regulations is a significant setback in the UK’s efforts to achieve its goal of net-zero emissions by 2050. However, Landlords can still make a significant impact by taking action to improve the energy efficiency of their properties. By doing so, they can not only save money and increase the value of their property but also improve the quality of life for their tenants.

Why Landlords are holding onto their investments – A positive outlook for Landlords in the UK Housing Market

by Asif AliPosted on

The UK property market has been unpredictable for some time now, it’s important for Landlords to carefully consider the pros and cons of selling up versus holding onto their investments. While there are certainly challenges to be faced in the current housing market, there are also reasons to be optimistic about the future.

The current housing crisis in the UK has been a highly talked about topic through the property investor communities over the last year. The crisis, caused by a lack of Landlords and an increasing demand for rentals, has caused significant impact to both property investors and individuals seeking suitable rental accommodation. 

The Guardian reported on the top challenges faced by current Landlords and buy-to-let investors:

  • Recent stamp duty increases have made buying new properties more expensive, reducing the amount of new landlords entering the market
  • The phased reduction of mortgage interest tax relief has reduced landlords’ profits, making it less financially viable to continue renting out properties
  • Proposed changes to the eviction process (For example, abolishing section 21 evictions) could mean that landlords may have to give tenants longer notice before evicting them

However, despite these challenges Landlords are holding onto their property investments and here’s why:

  • Yields – Rental yields in the UK are still high compared to other countries, providing a strong income stream for Landlords. Landlords have justifiable reason to raise rental prices in the current market, maintaining profits in the short term and potentially leading to high-yields in the long-term when financial strains ease again.
  • Demand – The demand for rental properties is likely to remain high, as many people continue to struggle to get onto the property ladder due to rising house prices. This creates a pool of tenants willing to pay higher monthly rent, and provides landlords with a wider choice of higher-quality tenants who are less likely to miss rental payments.
  • Long-term investment – While the market currently presents some concerning challenges and instability, it’s important to remember that it will stabilise again. When that happens, Landlords who hold onto their investments might benefit from increased yields in the future. 

As a Landlord, you should ensure that you are well-informed about changes to the rental landscape in the UK and how your investments will be affected. It’s best to take time to properly research the potential implications the changes have on your investments and weigh up the risks vs benefits. Whilst it is tempting to sell up when there are challenges in the market, impulse decisions can lead to large losses and potentially missing out on opportunities in the future. 

New ruling gives Landlords more power over evictions

by Asif AliPosted on

According to a recent announcement, Landlords will be given the power to evict unruly tenants, despite the proposed abolition of the section 21 ruling. 

There has been concern between Landlords following the discussion to get rid of the section 21 ruling, with Landlords concerned that they will have less control over their properties and not be able to evict tenants who breach their tenancy agreement.

Section 21 recap  

In 2019, the UK government announced that Landlords would no longer be able to evict tenants without a legitimate reason under the new Renters Reform Bill. This decision was met with significant opposition from landlords, with 84% of them against the ruling, according to a National Landlords Association survey. 

Landlords were concerned that this would make it more difficult to deal with tenants who were not paying rent, causing damage to the property, or violating the terms of their tenancy agreement.

Good news for Landlords 

The good news is that Landlords will be given more power to evict tenants under Section 8 .

The proposal is that this will be achieved through the introduction of a new model tenancy agreement, which could allow Landlords to evict tenants without providing a reason after four months of the tenancy. 

This means that Landlords will be able to serve notice on tenants more easily and quickly, ensuring that their property is protected.

Eviction restrictions

This power to evict will come with restrictions; Landlords will not be able to use this power to evict tenants who have raised concerns about the condition of the property or have made a complaint about the landlord. 

Additionally, Landlords will still need to follow the procedure for eviction, including providing the tenant with the correct notice and obtaining a court order.

The introduction of this power to evict is positive news for Landlords. This will give them more control over their properties and allow them to take action when necessary. However, there are some potential negatives to consider. Some tenants may be concerned that this power could be abused by Landlords and lead to unfair evictions. It will be important to ensure that the correct procedures are followed and that tenants are treated fairly.

How to protect revenue during the rental crisis

by Asif AliPosted on

It’s no secret that the UK is moving towards a serious supply and demand crisis. In addition to the growing cost of living and energy prices, what can landlords do to protect their revenues?

  1. Tenant Screening: One of the most effective ways for landlords to protect rental income is by carefully screening tenants by conducting credit checks, verifying employment, and checking references. By selecting tenants who have a stable income and good rental history, landlords can reduce the risk of rent arrears and therefore protect their income.
  2. Being informed: Landlords must stay up to date with all relevant regulations and guidelines. Including significant policy changes, such as The Renter’s Reform Bill. Understanding and properly preparing for policy changes will help landlords to avoid potentially large fines for non compliance.
  3. Rental insurance: Rental insurance can provide an extra layer of protection for landlords in the event of rent arrears or property damage.
  4. Re-evaluate rental prices: With rising costs, it is only reasonable for landlords to raise the monthly rent of their private lettings. Landlords are responsible for ensuring that rent increases are carried out legally by following Government guidelines and ensuring that rental increases comply with their current tenant contracts.
  5. Reviewing Investments: Landlords should schedule regular intervals to review their property portfolio and ensure that their investments are working as cost-effectively as possible. The profitability of an investment can change drastically depending on location demand and property type, landlords should continually be reviewing their existing investments and changing their strategy to meet the current market needs.

This year will be a tough period financially for UK landlords, however by staying informed and planning ahead, landlords will be able to protect their investments and consequently their profits. 

Landlords look forward to predicted drop in mortgage repayments

by Asif AliPosted on

Most UK landlords will be using fixed rate mortgages, but there’s good news on the horizon for those who aren’t. New analysis from wealth manager, Quilter, suggests that monthly mortgage payments could fall by around 25% by the end of 2023.

How does this affect landlords?
For affected landlords, this potential drop in mortgage costs could significantly increase cash flow, allowing them to increase profits or reinvest finances back into their rental property. For example, by using the additional income to pay for property repairs, improvements, or even to purchase additional rental properties.

Moreover, landlords may be able to consider mortgage repayment strategies to pay off their mortgages faster by making higher monthly payments or increasing their repayment frequency.


What evidence suggests the 25% drop?
Recent statistics released by the UK government’s house price index indicate that the average cost of a property in the country was £294,910 in November 2022. Mortgage rates surged to roughly 6% in the aftermath of the mini-budget, adding to the already high cost of investing in new properties. 

However, it is anticipated that house prices will fall by 8% in November 2023 as predicted by Halifax.

The director of Halifax Mortgages, Kim Kinnaird, said “We expected that the squeeze on household incomes from the rising cost of living and higher interest rates would lead to a slower housing market, particularly compared to the rapid growth of recent years,”

Halifax predicted that mortgage rates will continue to decline, potentially hitting 4%. As a result, the average UK house price could fall to £271,317, leading to an estimated 25% decrease in monthly mortgage payments compared to the previous year, with payments amounting to £1,145.

Karen Noye, mortgage expert at Quilter says:

“Rising mortgage rates have played a significant role in the affordability of buying a first home or moving home, and for many these costs were pushed to unaffordable highs. It is therefore a real positive that looking forward we can hope to see such a significant dip in monthly mortgage payments by the end of the year should house prices and mortgage rates continue to fall as expected.

The potential reduction in mortgage costs could make it easier for landlords to obtain new mortgages or refinance their existing mortgages. With lower interest rates, landlords may be able to secure more favorable loan terms or lower monthly payments. Additionally, with a lower mortgage payment, landlords may be able to increase their borrowing capacity, allowing them to expand their property portfolios.

Whilst substantial evidence points towards a fall in mortgage rates, this is still vulnerable to many different factors such as inflation, government intervention, the type of property and location. It is not impossible that mortgage rates will rise during 2023, and landlords should stay cautious and up-to-date with new developments as the year progresses.

Potential tax reform for landlords in 2023

by Asif AliPosted on

Landlords are urging a tax reform in order to combat the rental crisis sweeping the country. In the last year, mortgage prices have been steadily rising for buy-to-let landlords which for many means that selling their investment has sometimes seemed more financially viable than continuing with their rentals.

This has been bad news for tenants, with more people seeking rentals than ever before, in December 2022 Zoopla reported that tenant demand is 46 per cent above the five-year average, while total supply is 38 percent lower, highlighting a significant supply and demand challenge within the UK rental market. 

The widespread supply crisis has additional implications for renters from lower economic backgrounds. With reduced suitable affordable accommodation on the market, many renters will be forced into low quality rentals.

Tax challenges being faced by landlords

Tax changes which have been implemented over the last few years have had a significant impact on landlords. Since the introduction of Section 24 tax ruling in 2015, which means that landlords can no longer deduct their mortgage interest payments from their rental income when calculating their tax bill, landlords have faced increasing challenges and uncertainty around the profitability of their investments.

Additionally, landlords will be familiar with the additional 3% stamp duty surcharge for second residential properties and investments. Introduced in 2016, the reason for the surcharge was to combat housing and financial challenges caused by a nationwide increase in second home ownership.

Conservative MP, Andrew Lewer, made the case in the House of Commons Magazine for a tax reform for property owners, stating “Restrictions on mortgage interest relief and the imposition of a stamp duty levy on the purchase of homes to rent out have indeed made life more costly for landlords.”

In the article Lewer suggested that increasing tax and mortgage rates is contributing to landlords choosing to sell their investments which no longer seem financially viable to keep, causing significant challenges for the UK rental market.

“Marry this to the uncertainty surrounding the government’s plans for the sector, whether in energy efficiency requirements or the ending of Section 21 repossessions, and you do not exactly have an attractive market.”

Lewer wants to see a reform which scraps the 3% stamp duty surcharge for additional homes which he believes will greatly increase the number of new privately rented homes being made available across the next decade. He also suggested an unfreezing of Local Housing Allowance and better security for future rental regulations to encourage more long term investment. 

How to guarantee rental payments as cost of living increases

by Asif AliPosted on

Cost of living prices in the UK have been steadily increasing over recent years, having serious consequences for renters. A study in August 2022 revealed that food prices had risen by 12.5% compared to one year earlier. Additionally, rising gas and electric prices are putting huge strains on renters across the UK trying to keep up with the rising prices without compromising on their quality of living. 

Many renters are now facing difficulties being able to pay their monthly rent, due to no fault of their own. Long-term renters chose rental properties which fitted their budgets given the average cost of living prices at the time of entering their rental contract. However, renters who have been in their property for 2+ years are now finding their financial circumstances drastically changed, despite having stayed in the same property. 

Whilst a lot of renters have developed plans to cope with the rising costs, the significant increase in cost of living is inevitably causing serious problems for some renters, with knock-on consequences for landlords as tenants struggle to pay rent each month. 

What can landlords do to guarantee rental payments? 

When entering into new rental contracts, landlords should now pay more attention than ever to the average cost-of-living in the local area, and account for this when bringing in new tenants. Ensuring that your potential new tenants can provide proof of yearly income 30 times the rental cost will create a safety-net which should guarantee timely rental payments each month, whilst leaving space for cost of living prices to increase further throughout the next year. 

In addition to this, the most effective way to ensure timely rental payments is to enter into a “Rent Guarantee Scheme”. For a small monthly payment, this insurance will guarantee rental payments when a tenant does not pay their rent within 10 days of it being due – meaning that landlords will receive the rental payments each month even when their tenant is unable to pay. 

In summary, the cost of living crisis in the UK continues to cause serious challenges for both tenants and landlords. However, by developing an informed plan, landlords can limit the impact these challenges have on their monthly profits and gain more security with their investments.