It remains to be seen if and how this may play out in a practical sense but I realise that the vast majority of landlords won’t be holding their breath on the back of a period which has seen tax, regulatory and policy changes dampen landlord enthusiasm, confidence and commitment.
In fairness, many of the challenges experienced over the course of 2022 were factors far beyond the government’s control, as these events set in place a string of economic dominos. And with ongoing financial burdens having a major impact on tenants, homeowners and landlords across the UK, the outlook for 2023 is a tough one to predict with any great certainty.
However, as revealed in Aldermore’s Buy to Let City Tracker, a number of healthy and positive opportunities remain available for landlords across the UK. This found that despite 49% of respondents admitting that market conditions have become more challenging in the last twelve months, 54% still feel optimistic about the future and 66% stated that being a landlord remains a good way to make money.
Although, many approaches have been tempered in light of record levels of inflation, the cost-of-living crisis and housing market volatility. Almost half (48%) of the landlord respondents have been unable to expand their property portfolio and looking ahead, two out of five (42%) will even consider downsizing, as a result, if market conditions continue as they are. In a bid to maximise returns in the current environment, four out of 10 (42%) said that if they were to look at expanding their portfolio, they’d purchase as a limited company.
As the outlook for landlords appears uncertain, nearly two-thirds (62%) suggested that if market conditions continue as they are, they’ll have no choice but to put up rents by at least 10% in the next 12 months – adding to the pressures faced by tenants amid soaring energy prices and rising living costs. Yet, landlords remain conflicted with passing on costs in an already difficult climate, with just under two-thirds of landlords (64%) worried their tenants may not be able to pay their rent in the near future because of the rising cost of living.
Looking ahead at other considerations on landlords’ minds, in a bid to make their portfolios more sustainable and meet the government’s EPC regulations, nearly six out of 10 landlords (58%) say that the sustainability and energy efficiency of their property portfolio is a priority for them. In an effort to get ahead of the regulations, more than half (53%) are planning to carry out property improvements in the next 12 months to improve the energy efficiency of their portfolio.
This data represents a strong reflection of the sentiments and challenges on show across the BTL market from a landlord perspective. They also demonstrate how important it is for them to carefully assess the suitability and profitability of individual properties within their portfolios as well as their portfolios as a whole. This is where the support of specialist BTL advisers can really pay dividends in successfully maximising the potential of existing portfolios in 2023, helping them to diversify in the right areas and in identifying opportunities which will continue to present themselves over the course of the next 12 months and beyond.
