There’s been seismic news in politics over the last few months with no less than three Prime Ministers in 2022 alone and a “mini-budget” that saw the market panic, inflation rise and mortgage interest rates soar. News has also filtered through that many Buy to Let owners are selling up, with an estimate of 25% being touted on Property Industry Eye.
Now whether this is true or not, or reflective of our property market in Norfolk and Suffolk, is not really the focus of this blog post.
We’re asking, in playing card terms, should you stick or twist? You’re playing Pontoon, with a Queen of Hearts and a six, so is it worth sticking with 16 or risking investing more and not exceeding 21, so to speak.
It’s a difficult one – just as it is in Pontoon.
We all know that demand for rental properties remains sky-high. The dreaded void periods of old (where a landlord would be worried about two months of a vacant home) are largely gone. At Sefftons, we find that homes for rent are in huge demand and lets agreed on the same day, often. So a landlord shouldn’t worry about loss of revenue if mortgages continue to rise.
And yet.
If you’re on a specialist buy to let mortgage, with less than a year of a fixed term left, you may be rightly concerned that your mortgage costs are going to rise by a lot, and the market value of that property may fall, which could lead to you twisting and deciding to sell up before costs rise and values fall.
If your mortgage is set to rise by £200 a month, is it possible, ethical even, to pass this rise on to tenants in a cost of living crisis? We’ve seen evictions locally where portfolio landlords have hiked rents, issued Section 21 notices and found new tenants willing to pay much much more. This may not be your way of working though and you may want a more measured approach.
One way is to sell your existing tenanted properties with tenants in situ; another is to sell your property and buy in another where yields are more attractive. Norwich rents are much higher, for example, than rents in Great Yarmouth, King’s Lynn or Lowestoft – but property prices are higher near the city too. You get less for your money in NR1, NR2, NR3 than you would in NR30 or NR31.
It’s difficult, isn’t it?
We’ve seen in 2022 how political fortunes can shift so much – with Buy to Let, you do need a long term view.
Our advice is not to stick or twist yet though – but to call our experienced team on 01603 358 222 or call into our new office on Plumstead Road, to chat over coffee about what your options are.
