There are a number of reasons why landlords would want to sit tight this year before they increase their exposure to debt. Uncertainty about the taxes and rules governing their tenants is a key reason landlords are holding onto their purses a little longer, with rumours of 3-year leases on the cards. While rates and other fees seem to face an imminent increase, there are those who still deem it feasible to increase their rental portfolios this year, and with good reason.
Mortgage Options Remain Client-Friendly Despite Hesitant Market
Whether it’s the uncertainty of the effect Brexit will have on a landlord’s portfolio or just the talks of tax reforms and other fees, landlords are reluctant to embrace the positive changes said to come their way in 2019. According to reports, there is still a lot of money to be made in the buy-to-let market, despite a lower yield thanks to all the taxes, duties, and surcharges.
For landlords, one of the key ingredients to a good portfolio is going with a financial institution that offers a product that matches their needs. Lenders are using low-rate mortgages to keep their clients on the books, which works in the favour of landlords who are able to negotiate to fix that rate. This could also be the perfect time for landlords to discuss remortgaging their existing loans to benefit from the 5-year fixed rate option offered by some institutions.
Location Is Still The Determining Factor For A Good Yield
It comes as no surprise that certain areas in Britain tend to produce a higher yield for landlords than others. These locations are usually situated close to work hubs, nightlife, and other amenities.
This can lead to a number of good things for the landlord:
- The three-year lease is an asset rather than a liability
- They can charge high-end rentals
- The chances of landing a good tenant are so much higher, as the competition will be fierce
For landlords, there is more to just having a buy to let as an asset on the books, as it also needs to be able to generate a good income. Cities such as London is always a good place to start, thanks to the high demand. For landlords, securing a property in these types of locations may seem tough, however, the long-term benefits are worth it. London properties can generate more than 50% higher rental incomes than some of the surrounding cities and lesser-known suburbs.
This Is A Buyer’s Market
Property prices in the UK reached a 6-year low and for landlords, this is the ideal time to negotiate a good price on the ideal property. For landlords, the low prices will make up for the high charges, fees, and tax levied against the purchase. This means that the return on their investment will start going into green a lot sooner than in previous years. While talks of a market crash might be deterring landlords from a new purchase, property prices are unlikely to dip this low again.
While the forecast for the property market seems all rough and tumble at the moment, it might just be the ideal time for investors to scoop in and make the most of the low rates.
Author: Sandy Kenrick
Sandy Kenrick swapped a fast-paced career as business banker for the insurance industry. Long hours and a new family quickly led her to look beyond the world of finance. As a work from home mom, Sandy now gets to do what she loves. Much of her work still involves finance and business, but when that mid-afternoon sun swings around it’s time to switch off the laptop, pour a glass of wine, and enjoy her growing family.