Want to grow your property portfolio, but have no idea when the best time is to make additional investments? The old adage ‘there’s no time like the present’ has never been more accurate, and 2023 is an exceptional year to grow your buy-to-let property portfolio!
Despite high interest rates and increasing mortgage rates, the property market for buy-to-let investment is looking bright in 2023. Here are four reasons why:
Short supply of housing, paired with increasing demand for properties, is creating a greater sense of urgency for tenants to find their perfect home – and quick. This is largely due to the slow construction of new houses which means that the government are unable to meet their target of constructing 300,000 new homes each year. As a result, research predicts that the UK will experience a national shortfall of 610,000 between 2022 and 2027, putting additional pressure on an already demanding rental market.
This demand for rental property in 2023 and beyond will be exacerbated by the reduction in households getting onto the property ladder, leaving an increasing number of tenants in the market. This is due to a number of reasons, including the abolition of the Help to Buy scheme making it more difficult for first time buyers to get on the property ladder, paired with the rising cost of UK property as a whole., This bodes well for buy-to-let landlords whose properties will be more in-demand than ever.
As a result of such high demand for properties across the UK, tenants are willing to pay more to secure their new home. This bodes well for landlords looking to grow their property portfolio, as increasing yields means that it will take less time to recoup your initial investment and purchase additional properties to create sustainable portfolio growth.
Fleet Mortgages’ Buy-to-Let Rental Barometer has tracked a significant boost to rental yields across the country, with almost every UK region seeing an increase to yields over the last year and last quarter. This has contributed to residential rental yields in England and Wales reaching an all-time high at an average yield of 6.5% in Q1 2023. As such, landlords across the UK can be rest assured that their investment is more likely to reap significant rewards in 2023, making this year the best time to grow your portfolio.
Long-term forecasts look positive for the UK property market over the next few years. So, if you’re looking to reap the rewards of impressive rental yields in the short term, and then sell your unit in a few years, you should start investing now.
In the short term, rental growth is expected to grow by 3% per year across the country until 2027. Growth in key cities such as Manchester, Birmingham and Bristol looks particularly strong, with each of these cities predicted to experience rental price growth of 4%, 3.6% and 3.4% per year respectively.
For those looking to eventually offload parts of their buy-to-let portfolio, the market looks similarly positive. Every region of the UK is set to experience house price growth by 2027, with UK city centres set to perform exceptionally well. As with rental growth, Birmingham and Manchester are predicted to see the most growth, with an average annual growth rate of 3.6%. As such, 2023 is a good time to grow your property portfolio to avoid rising purchase prices and instead reap the benefits if you wish to sell.
Over the next few months and years, the rental market is set to change significantly. Regulation across the entire private rental sector is set to become stricter – from the introduction of landlord licensing schemes, to the requirement to obtain an EPC minimum rating of C. Landlords looking to grow their property portfolio in 2023 have a unique advantage as they are able to take into consideration these new rules and regulations when searching for their next purchase.
Upgrading properties to boost their energy efficiency and meet the standards set out for landlord licensing can be a time-consuming and costly process. Some properties will require drastic improvement in order to be compliant with these new pieces of legislation, which allows landlords to amend their budgets accordingly to set aside funds for any works in the meantime.
Whether you’re buying your first buy-to-let property or adding to an already substantial portfolio, Centrick is here to help. The Earn at Home hub has been designed with investment in mind, and contains an abundance of resources tailored to portfolio landlords to ensure that you have the knowledge and tools available to make the best investment decisions. Want more tailored advice? Fill in the form below and a member of our team will be in touch:
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