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New investment into private buy-to-let properties is stagnating, whilst tenant demand for rentals is increasing; it’s no surprise that the UK is facing a serious rental crisis. Increased competition for rentals across the country is driving rental prices higher each month – But private landlords still seem hesitant to expand their rental portfolios.
Why are landlords selling up?
Going back a couple of years, the pandemic created a huge sellers market across the UK. This, teamed with Rishi Sunak’s stamp duty holiday, created a “selling fever” as many private landlords jumped at the opportunity to sell-up.
This loss of private landlords has been intensified in the last year by a decrease in new landlords wanting to invest in buy-to-let properties. While the current rental crisis will be a contributing factor as private landlords wait for a more stable economy, there are likely additional factors at play which make this investment seem less appealing. One concern for new landlords will be the costly eco upgrades they will be required to make to properties by 2030.
Why should landlords invest in Buy-to-let now?
With the above in mind, landlords will likely be concerned about stepping into new buy-to-let investments, but with the right plan 2023 might be the perfect time to invest.
Historically, the best time to make an investment is when the property landscape looks bleak. Currently, buying competition is low and house prices continue to plummet across the country. In December 2022, the average UK house price dropped for the third month in a row by 1.5%, creating interesting affordable investment opportunities.
With increasing rental demand landlords will be able to charge higher rental prices, driving up yields for properties which were bought for lower prices.
Landlords who are still considering selling-up should consider selling their more expensive properties in the South in trade of new affordable investments in the North. Rental yields are increasing rapidly around cities such as Birmingham and Manchester, now could be the perfect time to capture these opportunities whilst property prices are still low.
Whilst no investment is risk-free, a property investment strategy tailored for the current market can still yield very profitable results. There will be some short-term hurdles which come with investing during a rental crisis but the right investments should lay a strong foundation for a lucrative long-term investment.