Is it a Good Time to Expand Your Buy-to-Let Portfolio?
Buy-to-lets are properties that landlords purchase to rent out to tenants. The Times claimed that buy-to-let boomed along with the rest of the property market last year and as a result banks are preparing for the growth to continue in 2022. But will the remnants of the pandemic that have creeped into the new year allow for a suitable economic climate to make expanding your buy-to-let portfolio profitable?
The Shawbrook survey estimates that two thirds of landlords feel positive about their prospects in this new year and a third of landlords plan to expand their portfolio in the next two months to buy at least one more property.
Additionally, out of that third, approximately 14% of landlords aim to buy more properties than they had initially planned, and further Zoopla described 2021 as the busiest year for the housing market, predicting rental prices to rise by 4.5% in 2022. All suggests faith in the expansion of the rental and buy-to-let market despite the uncertainty in the past two years associated with the pandemic.
In line with the emergence of the Covid-19, the buy-to-let mortgage availability largely crashed in 2020 with lenders withdrawing huge numbers of deals after the outbreak. However, ‘Which’ claim that 2 years later in 2022 the market has largely cooled down meaning lower rates which is good for landlords looking to expand their buy-to-let portfolio. Data from Moneyfacts shows that the average buy-to-let mortgage rates have been falling since March 2021 and are now at a level just above those before the outbreak of the pandemic.
Similarly, although the Bank of England’s Monetary Policy Committee have increased the base interest rate in recent years which creates the potential of higher mortgage repayment costs for landlords, interest rates have been significantly low since 2009 and the financial crash, making the purchase of buy-to-let mortgages by landlords still largely feasible still in 2022.
If looking to expand your buy-to-let portfolio it is most important to do extensive research into local markets. For example, across the UK rents have risen by approximately 1.6% year on year on average but this does not necessarily mean higher rent yields for landlords. For The average rent yield for the UK is 4.3% with the highest yield being Scotland and the lowest in the Southeast.
Along with the question of where to expand your portfolio to is another key factor of tenant demand, in particular tenant demand is evolving with the lifestyle changes associated with the pandemic. That is, more flexibility in the workplace in the form of working from home and hybrid working means that tenants are demanding more spacious properties with larger outdoor space, these rentals will be in greater demand in 2022.
2022 may therefore be a good time to expand your portfolio, it appears that the buy-to-let market is booming in landlord’s favour despite the uncertainty of the pandemic and the higher risk of a lower return on investments that comes with it.
In a crowded rental market, it’s imperative to know who you can rely on to maximise your return on property rental. If you choose ZFA Group, we will handle the management of your property with expertise and experience to offer you the highest quality service.
If you’re thinking of buying-to-let, chat to one of our friendly knowledgeable employees – we can help you with a range of services, from rent guarantee and property management, estate agency and property investment, and commercial letting.
Contact us today if you have any questions and we’ll take care of the rest.
I have been working with ZFA for 4 years and they manage my full portfolio. I don't need to worry about a thing, they manage every aspect of my properties - highly recommended.
Mr Stephen Jones