We’re all familiar with the idea of spring cleaning our homes as it makes sense to remove items that no longer work, replace things we’ve fallen out of love with and sell items that we think someone else would like. How many investors, however, apply this ‘spring cleaning’ principle to their property portfolio?
The UK’s buy-to-let market has changed beyond recognition over the last few years. As well as new legislation and greater levels of compliance, aspects such as the locations that return the best yields and the type of properties that let quickest have altered. All of this has happened during a pandemic and now we’re facing rising interest rates and soaring inflation. Your buy-to-let plans should change as the wider world does, so here’s how to spring clean your property investments.
Evaluate profit margins
With the end of another financial year comes the opportunity to examine your returns. Have you made much profit after tax? Were your expenses and outgoings more costly than in previous years? If your income is shrinking or you’ve managed to just break even, it’s worth forecasting how the next financial year will pan out to see if your property will still be a viable investment. If you’ve made a loss, it may be time to re-evaluate your investment strategy or exit the market.
If any of your buy-to-let properties are mortgaged, spring is a good time to identify any fixed rates that are due to expire, investigate new products that you may be able to swap to and debate whether to fix in again in a climate of rising rates. Be aware that you may find it more expensive to fund buy-to-lets in the future as we’re moving away from rock-bottom rates.
Study your yield
If your yield is diminishing due to high running costs or more expensive borrowing, the property may be failing to perform. Is there anything you can do to improve your yield, such as raising the rent or finding more competitive insurance products? Could you move away from a professional property manager to self-management? Use our yield calculator to help plan for your buy-to-let’s future.
Study yields elsewhere
There’s no rule to say you have to keep hold of poorly performing property investments, especially if yields are better elsewhere. Selling one buy-to-let to purchase another is sensible, especially if you can cash in on rising values and buy more cheaply in another area. If you are yield chasing and need to sell property fast to fund a reinvestment, Open Property Group can offer you completion and cash in your bank account within seven working days. You can start a sale now with a free cash offer.
Check what changes are ahead
Private landlords should use spring to plan for forthcoming changes, including the Renters’ Reform Bill and increasingly stringent energy efficiency standards. It’s worth reading up regarding the incoming obligations to see whether your buy-to-lets measure up as they stand now, or whether they will need costly improvements to make the legally-required grade.
Assess your cash reserves
Have you got a good fighting fund to cover void periods, unplanned maintenance or increasing service charges? We understand the cost of living crisis will force some landlords to raid their reserves or change their plans but we can help. If you planned to extend your property’s lease but now can’t afford to, Open Property Group will buy any property with a short lease. Likewise, if you can’t fund major works or eco improvements, we will happily buy problem properties.
Open Property Group is here to support landlords who are spring cleaning their buy-to-let investments. Contact us if you need to sell a property portfolio or offload a single buy-to-let in order to fund your future plans.
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