Read most of the property news right now and you’ll often read reports claiming that landlords are selling up at the moment. It’s argued that the climate for buy to let investing isn’t attractive anymore.
While some landlords certainly do seem to be selling that doesn’t mean that there aren’t still new buy to let opportunities out there. And as with any kind of investing there’s something to be said for considering a contrarian strategy in property …. and looking to buy when everyone else is selling.
Here are a few reasons to consider buying buy to lets even when many seem to be selling:
There’s huge demand for rented accommodation in many if not most places. It would maybe be understandable if landlords were getting out because no one wanted their product. But that’s far from the case.
Today it’s very unlikely that any decent rental property in any location could not be let easily, perhaps within days, at an attractive rental.
If anything the demand for rented accommodation is going to rise over the next few years, not fall.
Rents are rising. This can mean better yields for landlords. Rents have been rising fast over the last year or so …. by up to 10% annually or more. Although rises seem to have slowed recently they are still on an upward swing – something that hasn’t necessarily been the case for several years.
The average rent across the UK is now around £1,174 a month (£977 if you exclude London) according to Homelet.
Property prices are expected to fall in 2023, and maybe also in 2024, before rising. They will then start rising steadily year on year, according to many forecasts. So there could be a good opportunity to be had by buying now …. and still have a good chance of making a capital gain even in the medium term.
The Latest Property Price Forecasts For 2023
In the long term (10 or 20 years) it’s extremely unlikely that you won’t make a good capital gain if buying carefully now.
There could even be some bargains to be had by buying from landlords who are keen to get out of the market by perhaps selling under market value.
Mortgage rates won’t keep on rising forever. And many experts forecast that they will come down in the medium term. So if you can make the numbers add up after allowing for mortgage expenses now you may be able to remortgage at a better rate and improve your profits in a few years time.
Mortgage rates expected to fall in 2023 - Zoopla
The tax regime won’t always be the same. The latest blow to landlords has been the planned change in the Capital Gains Tax (CGT) thresholds. But property is always best seen as a long term investment and CGT could be totally different in say 20 years.
In any case, while the new rates will affect landlords selling soon they are not really an issue for landlords buying now with no plans to sell in the short term. The same could apply to any tax regime that has made property investing less financially attractive in recent years.
If you’re interested in buying to let at the moment there a few caveats you should bear in mind however:
Buy carefully …. extremely carefully. In the recent past pretty much any property would make money as a buy to let. That’s not really the case now.
You need to hunt out the best prices. In a cooler market there could be scope to make ‘cheeky bids’ and buy at a really good price. You need to look for the best yields. You need to look for areas with good demand. Also look for areas where prices are likely to hold up well even if average national house prices fall.
Estate and letting agents can advise on price trends and demand in their area.
Take expert advice on the best way to own your property. For example, whether to buy in your own name or through a limited company. Find out what will be most cost effective and tax efficient strategies for you.
Take expert advice on finance and get the very best deals. As the mortgage market changes find out what will be the best type of mortgage for your buy to let. For example whether flexible or fixed and for how long. Fixed rates have been usual for some years but may not be such a good idea if rates start to fall at some point
As always, shop around for the very best mortgage deal. Review your mortgage(s) regularly and check to see if better deals are available.
