The last few years have seen benefits reduce for landlords, making it harder to turn a profit. With the coronavirus causing even more trouble this year, there finally might be a silver lining for the rental market.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
With the mortgage market hitting a period of instability and the lockdown restrictions instituted by the government bringing economic uncertainty, it has become difficult to obtain a mortgage for some potential home buyers.
Lenders are modifying their affordability test and many are struggling to scrape together a deposit as their income has decreased. This is especially frustrating as high loan to value mortgages, often used by first-time buyers, are disappearing.
Enter the rental market
As we enter the winter months, the demand for rental properties has surged. According to RICS UK Residential Market Survey tenant demand has skyrocketed recently, with a third of survey contributors anticipating an increase over the next two years.
HomeLet’s monthly rental index reports that 10 of 12 regions showed an increase in rental value this year and the average rent in the UK has increased by more than 2%.
Bigger is better
BVA BDRC’s latest Landlords Panel report asserts that if you want to increase your profitability, you need to increase the number of properties you manage. Of course, if you own high-end properties you will inevitably have higher earnings, but 20% of landlords managing 20 or more successful properties reported a ‘substantial’ profit as opposed to a mere one in 20 landlords with up to five properties. Remortaging is also an attractive option for landlords with 11 or more properties to help release some of their capital.
Having more properties has actually proved to be beneficial through the pandemic. BVA BDRC’s report also found that the income of a third of landlords with 20 or more properties was not significantly impacted as a result of COVID-19.
Portfolio help
To ensure your property portfolio is as profitable as it can be, speak to a financial adviser who will be able to help you decide if expanding your property portfolio, or perhaps even holiday lets, is the right move for you.
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