The year 2023 has presented challenges for property investors, but it has also unveiled some opportunities that were scarce in recent years.
On one hand, the upward trend in base rates leading to increased mortgage rates since September 2021 has exerted pressure on existing investments. Investors now need to carefully assess whether deals remain viable at higher mortgage rates. HMO landlords, in particular, have faced tough times due to the added burden of rising utility costs alongside increased finance expenses.
However, the excessive price inflation of recent years, making it exceptionally difficult to secure good deals, has subsided. While prices haven’t dropped as anticipated, there have been more attractive bargains available this year, especially in cases where vendors are motivated to sell quickly. Notably, the auction market has seen a surge in high-quality properties.
Looking ahead to 2024, experts predict growth for professional investors. A leading lettings expert notes that the increasing number of portfolio landlords, who now own a significant portion of rented homes, reflects the impact of factors like the Renters (Reform Bill) and growing regulations. Economic circumstances have compelled landlords to become more financially savvy, making adjustments to their portfolios and properties, with some now managing as many as 50 properties—a trend previously rare.
Despite a subdued market expected in 2024, there are likely to be good bargains available. With finance becoming more accessible, opportunities should arise not only in 2024 but also in the lead-up to Christmas, as sellers aim to close deals before the holiday season.
Addressing concerns about the Renters (Reform) Bill, reports of landlords exiting the market due to increased regulation are often exaggerated. Many landlords, particularly those who entered the buy-to-let market in 1997, are now over 55 and have chosen to retire after witnessing substantial price and rental growth, especially during the pandemic.
While acknowledging reservations about certain aspects of the Renters (Reform) Bill, experts express a commitment to improving standards across the board. In England, the scrapping of the 2025-28 deadline for minimum EPC ratings of C and the postponement of abolishing Section 21 until improvements in the court system provide a positive outlook for 2024 compared to the current year.
Investing in property is highly location-specific and contingent on individual landlord objectives. Collaborating with local property experts, such as Mo’Living, is crucial to navigating the unique landscape of each area and determining the best course of action for property investment in 2024. Reach out to Mo’Living for guidance on selecting the optimal area and property type or adjusting your portfolio for a continued healthy financial return.
