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The UK property market has been unpredictable for some time now, it’s important for Landlords to carefully consider the pros and cons of selling up versus holding onto their investments. While there are certainly challenges to be faced in the current housing market, there are also reasons to be optimistic about the future.
The current housing crisis in the UK has been a highly talked about topic through the property investor communities over the last year. The crisis, caused by a lack of Landlords and an increasing demand for rentals, has caused significant impact to both property investors and individuals seeking suitable rental accommodation.
The Guardian reported on the top challenges faced by current Landlords and buy-to-let investors:
- Recent stamp duty increases have made buying new properties more expensive, reducing the amount of new landlords entering the market
- The phased reduction of mortgage interest tax relief has reduced landlords’ profits, making it less financially viable to continue renting out properties
- Proposed changes to the eviction process (For example, abolishing section 21 evictions) could mean that landlords may have to give tenants longer notice before evicting them
However, despite these challenges Landlords are holding onto their property investments and here’s why:
- Yields – Rental yields in the UK are still high compared to other countries, providing a strong income stream for Landlords. Landlords have justifiable reason to raise rental prices in the current market, maintaining profits in the short term and potentially leading to high-yields in the long-term when financial strains ease again.
- Demand – The demand for rental properties is likely to remain high, as many people continue to struggle to get onto the property ladder due to rising house prices. This creates a pool of tenants willing to pay higher monthly rent, and provides landlords with a wider choice of higher-quality tenants who are less likely to miss rental payments.
- Long-term investment – While the market currently presents some concerning challenges and instability, it’s important to remember that it will stabilise again. When that happens, Landlords who hold onto their investments might benefit from increased yields in the future.
As a Landlord, you should ensure that you are well-informed about changes to the rental landscape in the UK and how your investments will be affected. It’s best to take time to properly research the potential implications the changes have on your investments and weigh up the risks vs benefits. Whilst it is tempting to sell up when there are challenges in the market, impulse decisions can lead to large losses and potentially missing out on opportunities in the future.