2023 has been a year of ups and downs for property investors and landlords, but thankfully as the year draws to a close, the economic backdrop is slowly and steadily uplifting. Whilst there have been difficult times, there have been definitely been opportunities for some.
A rise in mortgage rates put pressure on landlords and those relying on mortgages were forced to re-assess their investments to see whether they still stacked up. An increase in rents saved many landlords, but for some, the mortgage rises combined with an increase in regulations and the looming renters reform bill, was too much and it was time to call it a day.
Sales properties were in short supply during the pandemic causing house prices to rise, but this steadied a little in the last half of the year and we have started to see bargains once again coming to the market. Demand for these ‘bargains’ has been high; landlords are still out there looking to add to their portfolios or start their property journeys. Savvy investors should do well in 2024.
Liverpool remains a good place for buy-to-let investments. House prices remain low with the average being £186,730 and yields on buy-to-lets are high. For instance, we currently have a three-bedroom house in L6 going for £90,000 with a yield of 8%.
A chronic mismatch between supply and demand has been the defining feature of the private rental market for the last 3 years, pushing rental demand well above average.
Compared to last year, rents in Liverpool have risen 9.5% and currently stand at £758 (city centre apartments however are receiving £1000 and above). UK average void periods increased from 14 to 18 days, indicating a seasonal cooling in demand after a hectic summer period (again our voids would generally be less than this).
A combination of factors has led to the increase in rental listings; the re-opening of the economy after pandemic restrictions were lifted, higher mortgage rates making access to home ownership more expensive and record levels of immigration into the UK, particularly high numbers of overseas students, has boosted demand.
Whilst the supply-demand imbalance in rented housing is not going to disappear in 2024, the market is set to move more into balance than it has been over the last 3 years. We expect UK rental growth to slow to +5% by December 2024 from 9.7% now, but it will continue to be a strong rental market.
If you would like any advice about any existing or new properties please get in touch with us on 0151 236 7771.
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