Reasons to hold onto your property investments

For Landlords the current housing crisis in the UK has led to a lot of discussions and major decisions over the last year (2022-2023)

Recap - What caused the housing crisis?

The UK is seeing large numbers of landlords choosing to sell their investments, along with a vastly reduced number of new landlords entering the market. This reduction in interest from property investors has unfortunately coincided with an increase in rental demand across the country.

These two factors are leading to a major housing crisis which is causing serious implications for potential renters who are competing with each other to find suitable rental accommodation.

Some of the main reasons for landlords choosing to sell their investments, include:

  • Increased Stamp duty has made buying new properties more expensive
  • The phased reduction of mortgage interest tax relief has reduced landlords' profits
  • Proposed changes to the eviction process may reduce the control landlords feel that they have over their properties
  • Brexit and Covid-19 were catalysts for an unstable economic landscape which is still causing turbulence and uncertainty for investors

Why should I retain my investment?

Despite the above challenges, there are many reasons to hold onto your rental properties. The challenging rental market also presents some interesting opportunities for landlords who are willing to wait-out the economic uncertainty and benefit from competitive rental demand.

Yields – Landlords can raise rental prices in the current (highly competitive) rental market, maintaining profits in the short term and potentially leading to high-yields in the long-term when financial strains ease again.

Demand – The demand for rental properties is steadily increasing with the supply crisis, as many people continue to struggle to get onto the property ladder due to rising house prices. Meaning, many tenants are willing to pay higher monthly rent, and landlords have a wider selection of potential tenants to choose from, leading to select higher-quality tenants who are less likely to miss rental payments.

Long-term investment – When the market restabilises, landlords who held onto their investments might benefit from increased yields in the future.

Whilst the property market in the UK is facing instability and uncertainty at the moment, affecting both landlords and potential renters, it’s important to remember that these challenges will not be permanent and the state of the rental market is ever-changing.

As a landlord, you should ensure that you are well-informed about changes to the rental landscape in the UK and how your investments will be affected. It’s best to take time to properly research the potential implications the changes have on your investments and weigh up the risks vs benefits. Whilst it is tempting to sell up when there are challenges in the market, impulse decisions can lead to large losses and potentially missing out on opportunities in the future.

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