Crawley and Horsham landlords set for 7% rise in rental incomes
After years of huge strain on landlords, things look set to get rosier for the buy-to-let market.
The last two to three years have been difficult for landlords with increasing regulation, dwindling tax benefits and increasing mortgage costs, all placing a big strain on landlords. This has led to some landlords inevitably selling up, especially those who started when there was very little regulation.
There’s no doubt improved regulation was required as tenants’ safety is imperative, but the large rise in mortgage costs has made many landlords question if it is viable to continue letting a property.
At Inspire we believe in looking at the long term when it comes to making good financial decisions on buy-to-lets. And there appears to be good news on the horizon. According to Roger Martin Fagg, a behavioural economist, the difficult times are coming to an end.
Improved market conditions over the next year including falling mortgage rates, a lack of housing supply and rising consumer confidence are signalling the return of better times for landlords. Locally, a potential expansion at Gatwick Airport could see 14,000 new jobs and £1billion added to the economy which will only increase demand for housing.
Roger, who has an outstanding record of predicting what’s going to happen in the market, has even predicted a 7 per cent increase in rental incomes.
We believe now is the time to hold steady and maintain your buy-to-let portfolio or potentially add to it.
The team at Inspire Estate Agents has taken a deeper look at the market forces indicating this to help you decide
What are the current indicators for improvement in the market?
UK money supply: This is the total volume of money held by the public. Although currently running at 0 per cent, this is expected to grow to three or four per cent by the end of the year meaning people have more money to spend.
Increased confidence: Retail sales are improving. The UK PMI has seen steady growth and wages growth is predicted to grow by five per cent with the labour market predicted to tighten around Autumn.
With inflation falling it’s widely expected that the Bank of England’s base rate will reduce the current high of 5.25 per cent to 4.75 per cent or possibly more. Competition amongst mortgage lenders who make their money from volume is also bringing interest rates down from their highs last year.
There is another major factor we need to consider. The Government has consistently missed its target for building new dwellings, which means there is a shortage of housing compared to those who need it.
This increase money supply and consumer confidence, falling mortgage rates, as well as a lack of housing, means there could be an increase in the speed at which houses are bought or sold in the market, as well as increased competition for rentals. This is likely to lead to an increase in house prices of around 3% this year.
A good time to add to your buy-to-let portfolio
Roger has predicted that we will see a further seven per cent growth on rental incomes this year. A massive help to Landlords with mortgage rates coming down and rents going up.
The biggest win is the prediction that we are at the start of house price increases. So now is a great time to add to your portfolio or at least maintain what you have.
Other market factors which support this speeding up of houses being bought and sold are rules on mortgage lending being relaxed, the return of the 100 per cent mortgage recently introduced by Skipton and political stability which should come from a new Labour government.
Crawley and Horsham set for economic growth?
In conclusion, we are expecting house prices to increase 3% this year with this growth to improve next year. We also recommend keeping an eye on the expansion plans at Gatwick Airport where there is a decision expected on its plans to reposition the centre line of the northern runway 12 meters north to allow dual runway operations, aligning with international safety standards.
Construction could start in 2025 and be completed and ready for operational use by the end of the decade. It's expected it goes ahead to double passenger numbers to create 14,000 jobs and inject a £ 1 billion boost into the local economy lifting house prices and rents further.
If you’d like any further advice contact the team at Inspire Estate Agents - inspireestates.co.uk