Only a few years ago, the buy to let property market was booming. New UK developments were being sold across the world by agencies with ‘roadshows’, with many investors from Singapore, Hong Kong and other countries looking for ‘capital growth’ and a ‘rental return’ in the London market as well as other major UK cities including Manchester, Liverpool and Edinburgh.
The appeal of letting your property has come to a ‘halt’. Before it was a ‘no brainer’ for people to rent out their family home. Now with the inability to offset tax against a mortgage, additional costs including rocketing builders costs, many landlords are opting to sell even though there is increased tenant demand with rents rising, this has been nullified by interest rate increases for many landlords. For some landlords the monthly mortgage is barely covered. You then have additional costs such as service charges, which in some newer developments can be excessive.
Landlords sold 35,000 more properties than they bought in 2022
Letting your property or becoming a buy to let landlord has become increasingly unappealing for the very reasons listed above. Since December 2021, interest rates have risen 12 times
Also, some landlords end up losing money as they have borrowed heavily on their properties. Some experienced buy to let landlords, decide to sell when they are faced with an extensive refurbishment at the end of a tenancy. There is a growing number of landlords selling at a record rate.
Pressure to sell has increased rents on renters
Landlords who have highly borrowed when interest rates were cheaper, are now under pressure when they have to re-mortgage. It can get to a point that monthly outgoings exceed income, despite rising rents. It is all about supply versus demand. With fewer properties on the market, high demand, rents have been pushed up with ‘bidding wars’ on rental properties becoming a ‘norm’.
Rising costs of raw materials and builders have contributed to landlords saying ‘sell’
You have had a great tenant who has been there for a number of years. Great to let your property with no void periods. However, the tenants has given notice, no works have been done to the property for years. External and internal refurbishment is required to re-let the property.
Since Brexit, raw materials and builders prices have increased substantially. You get to the point of it is it worth doing or just sell it. If you are breaking even every month, you need to re-mortgage soon and a local estate agent has said they have buyers. It ends up making more sense to sell. Another buy to let property off the market. I spoke to a South West London agent the other day. She said that their long-term landlords are now selling, and they have so few properties now to rent. This is echoed across the board.
Looking ahead at the UK rental market
The rising popularity of build to rents also known as BTR’s, is growing quickly amongst younger generations. In 2021 alone, 237,000 BTR’s were completed, mid-build or in planning according to the British Property Federation.
What is not to like about these new generation of rental properties. Many have a gym on-site, a cinema, social events, communal areas where you can work and meet other people. Ideal if you are relocating to a new area. BTR contracts are more flexible than being tied into a long term contract. Would you rather meet people, still have your privacy in your own home versus being alone in a property, making sure you can pay your monthly rent plus bills. Also with BTR’s they have a building team available to quickly fix any issues. You feel looked after.
The cost of getting on the rental ladder as well as buying a home
This News Agents podcast on the rental crisis goes into the UK rental market and the problems in more detail. Basically, everyone talks about the issues of younger generations getting on the ‘housing ladder’. Yet the same applies with the rental market. Rents have increased a huge amount. How can people save to buy, when a large percentage of their salaries goes on rent. People are ��stuck’ renting and some landlords are evicting tenants and raising rents.
Rents are forcing people out. They want to live and not just to pay the mortgage. Everything is inter-linked and with the increasing shortage of properties to rent, people are ‘thinking outside the box’ and willing to start afresh elsewhere. At Pets Lets, we are encouraging landlords to consider pets. Even a small dog or a house cat. You can mix & match properties on our portal, everything from long lets, short lets or holiday lets. As long as they are pet friendly. The first month is free. Agents & landlords listing with us are getting regular leads. Why not give it a go.
This article was written by Russell Hunt, Founder of Pets Lets, the UK’s pet-friendly property portal where landlords will consider pets. We work with clients from around the world looking to relocate with their pets to the UK. A hub of information & where you can create your own pet cv. Passionate about pets & property.