Knowledge of how the buy-to-let (BTL) market is performing can help landlords effectively prepare for changes that lie ahead and make the right investment decisions. This is especially important for landlords who rely on rent as their main source of income.
Various factors including the time of year, changes to legislation, and tenant demand can impact the profits that landlords receive.
Luckily for landlords, recent findings support the view that now is a good time to be a landlord.
The current BTL market supports high rental incomes, making it one that is of interest to landlords across the UK.
Financial benefits of the current buy-to-let market
Today’s BTL market is a lucrative one for landlords as rental properties in the UK continue to benefit from good returns through capital growth and rental profits.
Rightmove reports that the average annual growth outside the capital has exceeded 10%. This means that the average rent is now a record high of £1,088 a month – up from £982 a year ago. Overall, average rents are now 15% higher than during the same period two years ago.
The first and second quarter of 2022 have seen rents rise rapidly. Although the cost-of-living crisis is presumed to cause a slowdown in the market, locations with lower rental stock levels are likely to see further growth in the cost of rent.
Landlords must budget carefully as there are a range of costs involved including maintenance fees, management costs, purchase costs, and the price of getting the home ready for tenants. However, landlords who keep on top of their costs and seek guidance from experts can receive good returns from their investment.
For some landlords, properties are purchased below the market value then improvement work is carried out. In the long term, this can result in a home that increases in value, making its end total much more than the initial investment.
Rental property demand remains
Despite rental homes making up a hefty 35.7% of the UK’s 29.5 million dwellings in the UK, there is still a shortage of rental homes that need to be met to overcome the supply and demand discrepancy. The disparity between supply and demand continues to increase the price of rents faster than ever before.
As the cost-of-living crisis continues to fuel uncertainty among many, and interest rates continue to rise, mortgages have become harder to secure therefore renting has become the more feasible alternative for many.
Rental properties are still acknowledged as one of the best investments, mainly because the demand among tenants continues to rise.
And, in many cases, they are long-term tenants, which increases the chances of stable returns for landlords. Long-term renting remains popular as the most recent English Housing Survey reports that private renters live in their homes for 4.3 years on average.
More support than ever before
Landlords hoping to benefit from the rise in rents must remember that they do not have to embark on their lettings journey alone. There is plenty of support out there to make money and property management easier than ever before.
Landlords can rely on an accountant or specialist accounting software to keep on track of finances and ensure that their rental property is a worthwhile investment.
Meanwhile, with the help of a local lettings agent, landlords can receive concrete advice as well as accurate valuations about how much rent they could charge each month.
The right local letting agent can help put a plan in place that avoids void periods and makes the most of the buoyant BTL market.
If you are looking for your next investment opportunity, why not consider becoming a landlord? If approached in the right way, with the help of a professional lettings agent, this has can become a rewarding long term investment.
At Howland Jones, we will do all we can to help you get the most from your rental properties. Our offices are based in the village of Measham in the East Midlands, and we operate within a 20-mile radius of our base, giving us extensive knowledge of the local area. You can find out all about us by getting in contact here.