Thursday, April 18, 2024

Is now the right time to become landlord? Mike Collins Mortgage Advisor Explains

Mike Collins, a financial planner and property manager is ahead of the curve when it comes the rental market. He stated that if you are a landlord already and are planning for the future, your biggest decision will be this year whether to grow or reduce your portfolio.

“Interest rates are climbing, taking many people out of the mortgage marketplace and with a complete absence of affordable housing, it puts private landlords where they may have to accept tenants out if necessity rather than choice.”

Because of the ongoing housing crisis, the UK’s ability to function well is dependent on landlords. According to the English Housing Survey in 2010, the number of private landlords rose from 3.1million in 2008 up to 4.4million by 2020. This is roughly equivalent to one-in-five homes.

A mini-budget is the arrival of higher mortgage rates, due to the current cost of living crisis that has impacted many Americans.

Buy-to-let landlords (BTL) are the ones most affected by government legislation. It’s leading many to leave. The situation is even worse for tenants who are being forced to pay spiralling rents in some badly managed properties.

However, in such a difficult market, is this a good opportunity to become a landlord? Mike Collins explains.

Government rules

Different government ‘interventions’ have made landlords less profitable. There are higher stamp duty rates for 2016 and no relief from mortgage interest taxes in 2017.

Recently, legislation was passed to require landlords and tenants to make sure their properties are at least C in EPC ratings by 2025 for new leases and 2028 for existing leases. You should also remember the rules against evictions based on fault.

Unregulated lending

Landlords being a major player in the bridge borrowing game, there are many instances of unregulated lending. In addition, many landlords use cash for investment purchases. BTL will become less appealing as the UK’s population ages, which could result in an increase in regulation.

The government predicts that 25% of the UK will turn 65 in 2043. That means there will be a lot more downsizing. Also, we all know just how popular short-term loans can become in a rapidly changing housing market.

Maintaining compliance with legislation

Paul Conway developed Yuno to aid landlords with keeping tabs on changes in legislation. Conway thinks that regulations for landlords are updated approximately nine times per day. Many landlords state that their primary reasons for selling are due to forthcoming or recent changes.

Have spare cash

Although it may sound easy, becoming a landlord involves more than simply buying a place to rent and then sitting down. It is not. Residential property is going to require some effort. It is not uncommon to feel stressed out, especially when you consider rent arrears, property damages, and evictions. And all of this at a time where money is extremely tight.

It is likely that your investment will need repairs and refurbishment.

Experts will all agree that there will always be an imbalance of supply & demand. This will continue to drive rental growth in 2022. So if your finances are strong, you might consider buying your first buy–to-let.

Elliot Preece
Elliot Preece
Elliot is the Editor at ABCMoney. He manages a team that writes and contributes to many leading publications across a number of industries.

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