In the current market, those going against the accepted narrative may end up with the best results. According to most outlets and commentators, the BTL market is on its knees, and landlords are right to abandon ship.
The reality though, as always, is a bit more nuanced. Undoubtedly, there are challenges but for many, now may be the best time to get invested in the property market. Fortunately, there is a sizable cohort of landlords out there who appear to recognise this.
The latest HMRC landlord survey revealed 4% of landlords plan to add to their portfolios in the next 12 months, and 8% plan to expand over the next 5 years. Meanwhile, the vast majority plan to keep their portfolios unchanged over the next year, as opposed to selling up.
Some landlords have spotted that some of the best opportunities can be found in the current market. As one property investor quoted by The Times put it: “It’s a good time to buy. High yields, strong rental market meaning negligible void periods, and now lower mortgage rates due to interest rate cuts. I’ve also been able to purchase properties below market value due to sitting tenants, as other landlords leave the market.”
Indeed, BTL yields are at a 14-year high, there were 12 enquiries per rental property in Q1, and BTL mortgage rates have been falling in recent months. The 4% or so of landlords who are set to expand over the coming year have picked an opportune time to invest, but where exactly in the UK could present the best opportunities?
According to Hamptons, nine of the 10 best BTL hotspots can be found in the Midlands or North of England. Average gross yields in some of these locations, such as Redcar & Cleveland and Darlington, are nearing the 10% mark. Meanwhile, the national average is just shy of 6%.
The North specifically offers much potential for property investors right now. Zoopla’s latest data showed house prices in the North rose by 3% in the year to May, compared to 1.6% across the UK. Also, in the North East, new build prices specifically have risen by 33% over the past year.
There is plenty of reason to be optimistic for the long-term too. Savills’ latest forecast has predicted UK rental growth in the mainstream market will reach +17.6% by 2029. Prime regional markets will grow by 12.6% over the same period, while in prime central London, rental values are also set to increase by 12.6%.
We suspect that as these kinds of results increasingly come to the forefront, pessimism will die down in the market. More landlords are likely to want to expand, and we’ll be there for any potential rush of activity.