The question on everyone's lips: should I let or should I sell?
Right now we're noticing a trend. Buy-to-let owners are seeing messages in the media about new legislation increasing the pressure on owners. Some are coming to us with concerns that selling might be their best response.
Cory Devayya, one of our expert consultants, says:
"It’s understandable with rising overheads and less tax advantages some owners are considering alternative investments. However, with rising inflation, energy costs, fuel crises etc, it seems likely the sales market will see a decline in prices soon. This will result in less capital being available from the sale of a home and more people looking to rent.
On top of that, the London rental market is returning with a boom, and rents have increased significantly, often beyond pre-pandemic levels."
We randomly pulled some of our latest renewal and new let figures to show you the levels of uplift we're consistently seeing all over London:
I asked Spencer, our Managing Director of Lettings, what he thought:
"The worst thing you can do is have a knee-jerk response. If you've considered all your options and still feel getting rid of your asset and never looking back will give you the most peace of mind, then yes that's the right call. But it's important not to let fear drive your decision. So many owners I speak to are completely unaware of the options and opportunities that are available to them.
Firstly, news about how changes will affect the rental market comes in at a national, or maybe regional level. If you're throwing in variables from Devon and Liverpool and Manchester, they're not going to be as relevant to your decision as is what's going on at a hyper-local level. If you have a property in NW2, you really have to be looking at what the pull factors are in NW2. What sort of development is happening in that area?
If your concern is around interest rates, the reality is they're still exceptionally low. Currently, around 75% of people are on fixed rates - so there'll be no change for them. That being said, it's important to know whether you're on the best rate possible for you. If you don't know, it's worth checking.
Also when it comes to options and opportunities, many owners don't fully understand Capital Gains Tax, and how pulling money out tax free on a remortgage could work for you.
Another thing to consider is: are you achieving your maximum rental yield? Your agent could be getting you £1000 pcm, where another agent, with the right marketing, can achieve £1300 pcm. That's a significant difference in your yield.
Are you happy with your residents, or are they difficult and affecting how much you enjoy being an owner? If your property is managed, how is your managing agent? Are they working hard for you, and helping you stay prepared and on track with your property goals?
Another thing to check is - when was the last time you did a 'property empire' review? If you own one now, why not set your sights on owning two? Then you'd have two properties to pull equity out of to make work for you.
With inflation going up, let's say you have a property worth £100k, and your mortgage payments are £700 pcm. Within 5 year's time your property could be worth £150k. Your mortgage payments will be the same, so on paper you've just made £50k. Now you have £50k you can use to work in your favour.
I have first-hand experience in selling when I shouldn't have. In the past I sold several properties just because I thought it was the next step - it was the path I was on. What I didn't do is explore every option to retain, and what that could do for me down the road. Now I drive past those properties all the time thinking "that was foolish".
Property is no quick fix - there is always an element of risk being an owner. But if you are product focussed, we know what happens after that - you can see in the data above.
My advice is to really consider why you bought this property in the first place. Buying a property is not easy - remember the time and the emotional investment it took to find the right one in the right location? Why was it the right one? And now, what factors have driven you to the thought of selling? Is it the right decision, after you've considered all of your options?
Our job here is to be the conduit to tell you what's happening on the ground. Out of all of the owners that I've spoken to lately about options, only one decided selling was indeed right for them. Everyone else has concluded that actually, their best outcome is to retain their investment and make sure they're getting the most out of it."
If you want make sure you know all of the options available to you - that you're getting the most out of your invesment - get in contact with Spencer today at spencerl@paramount-properties!
