How well do you know us?

Author Sigma

The United Kingdom has a long history of real estate investment and continues to be a popular destination for buy-to-let investors. In 2023, there may be several benefits to investing in buy-to-let real estate in the UK.

1. Strong demand for rental properties: The UK has a high demand for rental properties, especially in cities with strong job markets and attractive lifestyles. This demand for rental properties can lead to steady rental income and potential for capital appreciation.
2. Positive rental yield: According to recent studies, the UK has a positive rental yield, which means that rental income can often exceed the costs of owning and maintaining a property, such as mortgage payments, insurance, and maintenance.
3. Stable property market: The UK has a stable property market with a history of steady growth, which can provide a sense of security for real estate investors. Additionally, the UK has a well-established legal framework for real estate transactions and property ownership, which can provide additional protection for investors.
4. Tax benefits: Similar to other countries, the UK offers several tax benefits for real estate investors. For example, mortgage interest and property expenses can be tax deductible, and rental income is subject to tax, which can be offset by deductions such as property repairs and maintenance.
5. Potential for long-term capital appreciation: The UK property market has a long history of steady growth, which has resulted in long-term capital appreciation for real estate investors. This can provide a source of passive income and long-term wealth building.
6. Flexibility: Buy-to-let real estate investing in the UK can offer a great deal of flexibility, especially for those who are looking to invest in property for the long term. For example, an investor can choose to rent out their property for a few years and then sell it for a profit, or they can choose to hold onto the property for several decades and reap the benefits of long-term capital appreciation.

However, it is important to note that real estate investing always carries some risk, and the UK property market is not immune to economic or political changes. Before investing in buy-to-let real estate in the UK, it is important to research the local market, understand the legal and regulatory requirements, and consult with a professional real estate agent or financial advisor.

In conclusion, the UK continues to be a popular destination for buy-to-let real estate investors, offering benefits such as strong demand for rental properties, positive rental yield, stable property market, tax benefits, potential for long-term capital appreciation, and flexibility.?

Author Lambda

The challenges are clear. Private landlords continue to face an increasingly hostile environment on a number of fronts; economically, politically and legislatively. Regulation continues to become ever more onerous, for example all newly rented properties needing to reach an EPC rating of C or above by 2025 and applying to all rental properties by 2028. The scare stories are ever present with concern around the Renters Reform Bill, rent freezes (as Scotland has seen) and eviction obstacles, and the prospect of a future Labour government only serves to heighten these fears. The profitability afforded by the low costs of borrowing is well and truly over for the foreseeable future with margins being squeezed for those not on fixed borrowing or having to refinance. Though hope is that that may be near a peak now, despite significant inflationary pressures still to the upside for the rest of this year.?

On the positive side yields are still healthy, with rental prices rising rapidly, over 12% year on year (almost 18% in London!) according to Zoopla’s Q3 2022 Rental Market Report. Demand is still strong due to the shortage of rental properties across the country and many landlords exiting the market over recent years due to the aforementioned challenges and punitive tax changes. Fortunately demand doesn’t look like subsiding anytime soon with the rising interest rates environment creating a growing category of renters, and the age of first time buyers on an upwards trajectory.?

In terms of “hot spots”, Manchester ranks number one in the Aldermore Bank’s buy-to-let city tracker, which ranks the UK’s best areas for buy-to-let opportunities. This northern gem has seen long-term property price growth (averaging 5.6% annually), plus strong tenant demand with almost a third of residents (31%) renting privately. London and Bristol make up the top 3 with Milton Keynes and Peterborough entering the top 10 spots largely due to becoming increasingly popular with commuters since the pandemic. Falling down the ranking were Northampton, Leicester, and Derby which may just be normalising after strong performances over recent years.?

So, there are definite headwinds but as always there remain opportunities for those approaching investment in a professional and considered manner with thorough risk mitigation strategies in place.?

Author Omega

Homeownership is a primary desire for most people in the UK, marking a distinct move from generation rent to generation own.??

With buy-to-let mortgage products turning 26 years old, the advent of which saw millions then and many millions more use real estate as an investment vehicle for regular income, capital growth potential and as part of a fiscally responsible retirement plan/ pension.

The future looks less attractive than it did 12 months ago. The combination of numerate tax changes, additional compliance, interest rate rises, lending criteria changes/ restrictions, increased costs of materials, services and labour all contribute to the steady reduction in profit/ margin for the modern day buy-to-let real estate investor.

By comparison we have witnessed two years of double digit capital appreciation, with the added benefit of rental demand increasing rental returns. Buy-to-let remains popular as the market comprises some ￡2.74 million landlords, holding a little over ￡1 trillion in real estate assets collectively.?

The last 12 months will give us an indication of the future performance of the market;

• The value of ￡8.5 billion of buy-to-let properties were purchased by UK landlords in Q1 2022.
• In 2022, more than 211,000 buy-to-let mortgages were approved by UK lenders. This represents approximately 13.6% of total mortgage lending for the year.?
• Owner/occupier buy-to-let mortgages in 2022 are valued at approximately ￡955 billion, with buy-to-let mortgages totalling ￡41.8 billion.?
• There are currently around ￡2.74 million landlords in the UK, with more than two-thirds (68%) of those landlords being over the age of 55.
• The average UK landlord has eight properties in their portfolio, generating a gross annual rental income of around ￡61,000 per property.?

The private rental sector is the UK’s second largest demographic, which consists of approximately ￡4.5 million households.?

It is estimated that the private rental sector will need to increase by 227,000 homes (every year) in order to meet the forecasted demand of an additional ￡1.8 million households required by 2032.

In 2022 - there were more than double the amount of buy-to-let mortgages approved than in 2012.

In 2022 - owner/ occupier mortgage lending is approximately three times the size it was in 2007 (￡955 billion) in value.

In 2022 - buy-to-let mortgages advances had been valued at approximately ￡41.8 billion, this is roughly double what it was in 2013.

In 2023 - the value of buy-to-let mortgage advances are expected to rise considerably from ￡43.5 billion to more than ￡69 billion by 2023.

The data clearly shows that the future of buy-to-let investing remains viable.?

Whilst there are significant challenges there are also significant opportunities, the continued need for housing and the increase in capital values, rents and the steadying of inflation for the time being means that buy-to-let as an investment vehicle remains very much alive in 2023.

Author Gamma

2023 is not set to be the brightest year for property investors. “Old School” Landlords and Landladies. Tax has ramped up to its highest in many years, regardless of how you own the stuff. The law is tightening the noose.?

The cost of living means fewer pounds in the pocket to pay rent. Rents are up though? Sure, but not up as much as maintenance. Not up as much as mortgage interest! The whole thing is a bust, waiting to happen. But there’s no choice, people will always want property, right? Maybe, but if they can’t afford it and the council isn’t picking up the tab, then who is? Changing laws to make sure tenants can stay in properties longer - not a solution in sight, just another way of confusing things. Then, what do you do with the money if it isn’t in property? That’s the other reason that always comes up for staying “in”.?

The trouble is, that game has changed as well. What about government bonds, returning 4% or more depending on the currency you are looking at? Quite attractive, no, for “No risk”. What’s the point of the time and effort if you can get some element of return while doing nothing for it apart from moving money? Time to take the money and get out, I say. Sell, sell, sell. People are always going to want flats and houses - owner occupiers still have a healthy level of demand. They took a break when that idiot Truss was in charge.?

They are back now though, wanting to move, wanting to own. Haven’t even mentioned yet - but do you realise prices are going down? They’ve been going down for 5 or 6 months now, on the trot. Quick - before those big gains thanks to the pandemic, the stamp duty holiday, and all the rest of it, are all gone - sell now! Look forward to a new life of relaxation - no leaky taps, no dodgy rooves, no non-payers - no crazy EPC legislation or whatever the hell is going on in the “Green revolution”. Take the money and run - move abroad, save on the tax, and drink in the sun.?

You know it makes sense. So what if there aren’t enough houses? So what if a rental market like this hasn’t been seen ever before? Who cares, that’s not your problem, or mine? Just get out while the going still looks OK, take cover, and watch from a distance as it all goes wrong over the next 5 years or whatever.?

Let the next government sort it out - which there’s no chance of doing. Rather than waiting for an even more hostile environment for Landlords - buy to let just make no money anymore over and above what you can get in the bank, so you know it makes sense. Sell up!

Author Alpha

Buy-to-let landlords are in for a rocky ride in 2023. Not everyone will have the same experience but there will be many common aspects as the Government policy is clearly aimed at corporatising being a landlord.?

One of the key considerations in the property market is availability of finance. Without that liquidity in the market dries up, transaction volumes go down and people are forced to sell for “below-the-market-value”. The era of cheap finance and high LTVs are gone. Those landlords that are highly geared with LTV at 70-75% and have fixed-rates coming to an end soon, will find it difficult to refinance their property with the same LTV. Their options will include topping up the equity or selling the property to end users. We are already seeing landlords quitting the market and we will see more of it in 2023.?

2023 will also be an era of landlords noticing the effects of changes in taxation. Some will make a paper gain but are already paying most of that gain in tax. This, coupled with increased regulatory obligations, leave very little motivation for senior landlords to continue.?

However, it’s not all doom and gloom. New generations of property investors are going to find ways of using this to their advantage. It’s a natural way of business. I don’t know what this is going to look like but the property market is like water… it always finds its level.