For the last few years, buy-to-let investors – and the property market at large – have been hit by short-term struggles that have caused some landlords to exit the sector. But Just Landlords is reminding investors that property is a long-term investment.
We’ve all heard the constant stream of news recently regarding tax changes for buy-to-let landlords, new rules and regulations in the private rental sector, and how political uncertainty is hitting the housing market.
Although these new market conditions may be adversely affecting some landlords’ profits, investors should remember that property is, typically, a long-term investment option. As such, Just Landlords insists that landlords should be looking past any short-term struggles that they’re experiencing and focusing on longer-term positives.
In times of doom and gloom, Just Landlords is reminding investors of the long-term benefits that they can achieve from their portfolios, rather than the short-term struggles that they may be facing:
Rent price growth
The private rental sector and tenant demand are continuing to grow across the country, causing rents to rise as a result. Although this is bad news for tenants, it should be good news for landlords.
However, some landlords are, in fact, not charging enough for their properties and could be unintentionally giving themselves a pay cut every year, if their rents don’t rise in line with inflation.
Although you don’t want to find yourself alienating prospective tenants by pricing your properties too highly, you must ensure that you earn enough rental income each month to create healthy returns.
By adjusting your current rent prices, you may find that you’re able to withstand the Government’s tax changes a little better.
It can also be easy to focus purely on the rental income that enters your bank account every month, but don’t forget that your property is making money all the time, based on capital gains.
Traditionally, landlords will own their property investments for many years before they sell up, allowing them to realise the full potential of house price growth over that period.
When times are tough and you feel that your portfolio isn’t performing as well as you’d hoped, look at how much house prices have appreciated by in your property’s area since you’ve owned it, and use this to roughly estimate how much you can expect to make on it by the time you plan to sell.
Remember that property isn’t all about monthly rental income – house prices in certain locations have surged in recent years, while they are predicted to do so further in particular hotspots.
Mandatory long-term tenancies have been debated in Parliament over recent months, but there’s been little movement on actually implementing them. Nevertheless, it could be a good idea for landlords to introduce them of their own accords.
In times of uncertainty across the political and economic agendas, having reliable tenants in your properties for a long, defined period of time will give you some peace of mind that you should continue receiving regular rental income and your investment will be looked after.
Many tenants these days are looking for security in their contracts, so you may find that your property appeals to more potential renters if you advertise it for long-term tenancies. Not only will this ensure that your property is filled for longer, but it will also (hopefully) help it let quicker.
Finding reliable tenants is one of the main struggles of being a landlord, so, if you do manage to find some, try to keep them for as long as possible, by offering a longer-term agreement.
Landlords will be sick of hearing about new changes to the law, and may feel that the Government has unfairly attacked them in the last few years. However, reading up on any new or changing legislation is absolutely essential in making sure that you’re prepared for being a long-term investor.
Understanding your legal responsibilities will also help you manage any short-term struggles that you may be facing at the hands of the Government. You may decide to use a letting agent to help you stay on top of your duties, or discuss your finances with a professional adviser.
Regardless of the services that you enlist, you, as the landlord, are responsible for ensuring that any legal requirements are fulfilled, so you must at least be aware of them.
Just Landlords’ sister site, Landlord News, is a free resource that aims to keep landlords up to date with any changes to the law. Spending a few minutes of each day reading up on the latest updates will go a long way to improving your knowledge and helping you plan for the future.
It’s been another difficult year for landlords, but we hope that Just Landlords has helped you look past some of the short-term struggles that you may be facing, in order to see the full potential of your investment over the long-term.
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