Rented Property Portfolio

May 2023

Rented Property Portfolio

What’s the news?

In the news last month, Zoopla found that roughly a third of rental properties were sold off, and rents were going up, so this is a huge concern for many.

People who hold buy-2-let properties usually have them highly mortgaged. Typically, this is done to release equity to then put towards further property purchases. Properties are held: personally, in a partnership, or more often now, in a limited company (given the changes to taxation relief).

Mortgage rates have gone up simultaneously as lending has become stricter, and house valuations appear to have gone down.

Those wishing rent

Now there are problems arising for both owners of rented properties and those wishing to rent. Owners buy properties as an investment, usually as well as having a pension, rather than instead of. This means owners look to profit on the rental receipts after the mortgage and maintenance costs, plus the increasing capital value, to tie in with pension growth. With mortgage rates up significantly and no increase in property values, the margins are small to non-existent.

Therefore, this has led to property portfolios being broken up or sold in their entirety. By way of reference, my company has acquired several new clients recently due to property sales.

Unfortunately for tenants, not only are rents rising at their highest rate for about 13 years but there is also considerably less to choose from.

The outcome

In summary, it is a bad time to be a tenant and not much better to be a landlord with big mortgages. One thing helping people today to get on the property ladder (other than the bank of Mum and Dad) is inheritance. Generally, they are more substantial now than in any previous generation, due again to houses being sold.

With older people having mortgages that are due to extend beyond planned retirement, inheritances are also helping to clear balances. However, inheritances should not be relied on, as care homes and funding care are hugely expensive.

If you are unsure whether to sell or buy a buy-to-let or keep it, talk to our Chartered and Certified experts or someone who understands the right options for you and can best help.

Please call us on 01480 869466 for a free initial, no obligation chat.

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