Did you know there are 266,000 LESS properties in the private rented sector compared to 3 years ago?

 

This is because a lot of landlords are leaving the market, which is usually for one of two reasons:

 

  • They’ve been in the market for 10-20 years and are fed up of new regulations constantly coming into play, regulations that they feel don’t protect them and their asset & will also cause them to fork out on making their property compliant if it is not a brand new property.
  • A huge increase in property prices over the last 10 years of, with property prices increasing 65% from January 2012 to January 2022 according to Statista, and 15.6% during the period from July 2020 to January 2022, has led to landlords wanting to take advantage of their capital gains and leave the market to put their money & gains elsewhere

 

The question, however, is one of timing.

 

Is it ever a good time to leave the market?

 

With property prices predicted to increase another 50% in the next 10 years, your gains will be even higher. Still looking at the past decade, the average monthly mortgage payment increased by 13%, whilst the average monthly rent increase 40% in the same period, and almost 20% over the past 2 years up to June 2022 & an average national increase of 17.96% in July 2022 alone, with high increases expected to continue with rising inflation, but also the competition for residential properties to buy and the price increases there leading more people to stay in rented accommodation longer as they cannot afford the downpayment of 10-15% or the mortgage repayments with rising interest rates, or look to renting as a temporary option for 6-12 months whilst they find another property to buy & live in.

 

This current climate will lead to a continuous increase in rental prices which mean your asset is performing better in terms of yield year on year - the average rental yield increased 0.6% from June 2021 to June 2022 - and your monthly rent is increasing at a much faster pace than your mortgage repayments on the property will each year, even with the Bank of England increasing the base rates for borrowing and with plans for more increases.

 

As a landlord who is considering leaving the private rented sector, the question you need to ask is do you want to cash out now and put your money elsewhere? Or continue to see your cashflow increase year on year if you choose to stay in line with rental prices, and get a good managing agent to take care of new compliance laws for you, so you can cash out later down the line with an even bigger gain if that capital gains are of interest to you?

 

To talk to a lettings expert about your options, request a callback below