Recent years have been challenging for the property market, with 2023 seeing some of the biggest changes and pressures for landlords to absorb and respond to. In this article we give landlords our top predictions and tips going into 2024 on the back of what has been a turbulent period.
Firstly, let’s get a balanced perspective. Yes, because of the headwinds over recent years, many landlords have chosen to leave the industry, but it’s not all doom and gloom. As any seasoned entrepreneur will tell you, opportunities normally present themselves during times of turmoil. From the lettings industry perspective, supply and demand plus other factors are filtering through to the market. Rents up 9.3% year on year, the average time to let via Rightmove is at 17 days, and the ratio of tenants to properties currently at 25:1.
These stats should not be dismissed out of hand, and – superficially at least – would indicate that now should be a good time to be a landlord. As with any business though, it also pays to go in with your eyes open.
So, with that said, let’s take a look at our top tips for navigating the current market.
Be aware of market trends.
As always – but more so this coming year – it is important for investors to be aware of market trends – both local and national – and adjust their investment strategy accordingly.
Embrace diversification and opportunity.
This is related to point 1. Now is not the time to take a one size fits all approach. There are many different property investment strategies and investors should educate themselves and be open to what works in their specific areas. New strategies may be emerging that are more profitable or lower risk than the established approach.
Focus on ‘professionalising’ your business.
Old ways of working are just that – old. This is the only thing that is a given. They may work fine, but processes and systems should be constantly under suspicion and should be frequently reviewed and enhanced to maximise efficiency. In these days of increasing costs in the lettings industry, this is more important than ever. Of particular importance is lettings management. Landlords should review and potentially enhance their property management strategies to ensure they are cost-effective, provide the level of service they need, and align with current regulations and tenant expectations. In short, landlords should be looking to run their operations in a professional and business-like manner
Review risk cover.
Any business owner needs to protect themselves and their investments. For landlords operating in the current climate, this is more important than ever. Landlords using a lettings agency should review what insurance coverage their agency provides. These insurances include rent protection, legal cover and landlord insurance. Any gaps should be identified and filled. For the independent, self-managing landlord, these products can be obtained in the open market-place. Alternatively, landlords should make sure they have an adequate cash slush fund to cover voids, non-payment of rent and costly maintenance events.
Adapt and survive.
The Renters Reform bill has had a significant impact on the lettings industry already. This includes the intended abolishing of the use of Sec 21 – so-called ‘no fault’ evictions – and transitioning to periodic tenancies. While the exact details of when these changes will occur is still being debated, landlords need to be aware of only one thing – they need to adapt to the new reality. This is the general lesson that landlords should take on board as markets – not just the property market – generally do change and investors and business owners who can adapt are the ones who not only survive but thrive.
Improve the quality of your portfolio.
Proposed changes to EPC requirements for rental properties may be off the table – for now – but this is only one part of the equation. It has always been good practice for landlords to continually review the quality of the portfolio and offering in the market-place. This includes being attentive to maintenance and any further improvements that can be made to their properties. This will enable landlords to increase their rents having provided a better-quality product. The market-place is changing and tenants are becoming more discerning, particularly – but not only – in relation to energy efficiency.
So, let’s talk about the elephant in the room – rents. Put quite simply landlords should recognise that they are running a business and as such – like any business – there should be a continue drive to increase income and the price point of their product – the rent – so it reflects a fair exchange in the market-place. The alternative to getting a fair – and profitable – return for their product, is to go out of business. Or to put it another way – to move aside and make way for business owners who do value the product they supply. Simple.
Focus on tax efficiency.
This relevant to landlords who are ‘selling up’ but also to the wider community. Capital Gains Tax thresholds are changing from April 2024. The changes will likely increase tax liability for landlords who sell properties. Landlords must be aware of the implications of a sale versus maintaining or extending their portfolios. In the wider tax context – with the UK close to an all-time high level of tax burden across society – more than ever, landlords, business owners and investors should be aware of the tax implications of their decisions and if necessary, seek expert tax advice.
In conclusion
Navigating the property market in 2024 demands a strategic and informed approach from landlords. At Lifeboat Lettings, we understand the challenges and opportunities that lie ahead, and we are here to support you on your journey to success.
Take the next step towards a successful property venture. Contact us today to discuss your specific requirements, learn more about our services, or simply have a conversation about the ever-changing landscape of the property market. Your success is our priority, and at Lifeboat Lettings, we’re here to steer you towards it.
Contact Us Now on 01233 802803 or contact@lifeboatlettings.com to embark on a journey of excellence in property management.
