Leaders Romans Group (LRG) has surveyed its landlord clients representing 380 properties, nationwide to understand current sentiment towards property investment.
Some 75% of landlords surveyed identify ‘A shortage of rental properties in my area’ as a prime opportunity, marking a substantial increase from 29% in February. Similarly, 62% recognise ‘Increased rental yields’ as a real prospect, a rise from 44% in the previous survey.
LRG says this is backed up by recent market analysis from the Housing Insight Report which shows the number of new prospective tenants registered increased from 2022 figures. August 2023 had an average of 197 prospective tenants registering compared to 149 in July 2022. Figures in August 2023 were up almost 32% year on year which indicates robust demand for rental properties, enabling landlords to capitalise on higher rental yields.
Furthermore, landlords are optimistic about the continued steady rise in house prices: 40% anticipate ‘House price increases from 2024 onwards’ – a notable increase from 17% in the Q1 survey. This strong outlook is reinforced by the broader market trends that indicate a slowdown in housebuilding, contributing to reduced supply and heightened demand and thereby bolstering the potential for higher rental income.
While acknowledging the challenges posed by various factors – including the Renters Reform Billand mortgage rates – LRG which represents over 42,000 landlords remains steadfast in its belief that several essential components for a positive market remain intact. The organisation anticipates that interest rates will decrease in the lead-up to the 2024 general election and has doubts about the progression of the Renters Reform Bill.
Allison Thompson, national lettings MD, LRG, said, “Demand for rental properties has seen a 32% increase since last year, with rental prices continuing to rise. This shows the return on investment for landlords remains positive. Those landlords we have recently surveyed remain optimistic about the opportunities available in the coming year. LRG’s resounding message to landlords is to remain committed on the basis that property investment is a reliable and lucrative long-term option.
“Furthermore, due to high levels of demand for rental properties and a slow-down in property sales, we’re increasingly providing lettings advice to homeowners who need to move but are struggling to sell or don’t want to reduce their house price. Across the country, across different property types and locations many people in this position are taking advantage of unparalleled demand in the lettings sector.”
Landlords appear to share the positive outlook: LRG’s research indicates that the majority of landlords are committed to their property portfolios. Some 68% intend to maintain their existing holdings, while 6% plan to expand their investments.
Moreover, the confidence in property as a retirement investment vehicle is evident, with 61% of respondents favouring ‘property’ as a superior option for retirement, compared to 39% who opted for ‘pension.’
So while challenges exist, both experts and private landlords themselves share the view that the positives far outweigh the negatives for the foreseeable future, according to Thompson.
No doubting short supply of suitable properties with high demand and higher rents looks very inviting. But lets flip the narrative and ask, shouldn’t BTL wait?
Current and expected risks:
Interest rates are not competitive at this time
Many tenants cannot afford or maintain the often ludicrous asked rents
Tenants income has gone down in real terms.
Legislative changes on horizon, are you going to have substantial financial overheads AND liabilities if you fall foul.
If Rent Capping is introduced …… you’re nuked.
The devil is in the wings with a new election due
You want to fork out how many £K’s not knowing?
Landlords are leaving the market …. ask them why!
Yes, the stories heading does sound inviting but is not a true reflection of what you may actually be getting into. For BTL it has a risk rating, more in keeping with high risk today for the average BTL and wait and see when the dust has settled from the fall out of Renters Reform Bill and new government plans. No need to rush into anything today, it will be the same situation today in a years time with renters, may even be a better opportunity on property values going down.
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If “68% intend to maintain their existing holdings, while 6% plan to expand their investments”, that leaves 26% presumably looking to exit. This isn’t like a general election, where victory goes to the majority – it sounds like an alarming number want out to me. Such is the vicious cycle the PRS is in – higher rents leads to more communist politicians, which leads to higher rents.
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