Is Anyone Still Buying Investment Properties?

An awful lot of the column inches dedicated to the private rented sector (PRS) at present are proclaiming that landlords are falling over each other to sell their properties and get out of the market.

Far less is being written about what’s happening to this supposed avalanche of properties hitting the market. Who is buying all of these homes? Owner occupiers? The next generation of landlords? Fools and knaves?

As experienced property professionals, we spend our working hours helping landlords interested in buying investment properties, and while it’s true that overall sales are down a little, the market is still buoyant.

Put it this way – we’re not considering giving up and becoming TikTok influencers yet! Let’s take a look at who is buying investment properties and why they’re doing so.

Perception isn’t reality

Determining the relationship between what we read in publications and online against the situation in the ‘real’ world is an academic discipline in itself.

There are many factors that decide what is served up to us as ‘news’, and while we’re not going down some conspiracy rabbit hole, what we read, while true, may not represent the broader world as experienced by many people.

It’s accepted that all news outlets will publish stories in a manner designed to maximise coverage – these days we refer to this as ‘clickbait’ – and that is an excellent description of what’s going on.

Working in the buy-to-let (BTL) property market, what we see does not reflect the lurid headlines. It may well be that Mr. Smith has decided to sell up his three BTL properties, but all that really tells you what one individual has done.

In short, it’s important to understand that headlines do not tell the whole story, they were never designed to do that.

Reality is a bit boring

The current economic climate, combined with regulatory and legislative change, is making landlord’s lives more difficult. That however doesn’t mean that the majority are immediately reaching for the sell-everything nuclear option.

However, stories about landlords and property investors taking time to speak to their accountants and spending hours calculating their best move frankly aren’t news, so you don’t hear them.

The media bias against landlords doesn’t help either. We wrote about this previously – “Does the media treat landlords unfairly?”, and there is a very vocal community online who rejoice in anything which seems to make the life of the PRS harder.

You’ll see lots about landlords selling up, about falling house prices, about how it Serves Them Right. Yeah. You’ve not really thought that through have you, Mr Keyboard Warrior?

Potential homeowners are still finding it difficult to buy a home of their own, getting a mortgage being part of their problems. So who in the market might just have available cash to snap up property bargains?

There really is a huge amount of claptrap spouted online.

No-one is buying investment properties!

That’s not our experience at all. It’s true that the market for investment properties may not be quite as buoyant as it was a year ago, but it is very far from stagnant.

Not convinced? Just Google ‘who’s buying investment properties in the UK’. There will be all the caveats that we also apply about personal circumstances and goals but the majority of search results will be overwhelmingly positive.

The overriding sense is that in a period of economic uncertainty, especially in such a period, property is a solid investment for the medium to long term.

We have seen nothing concrete (forgive the pun) to suggest that the government actually has viable plans to address the shortage of housing. Despite demands from various sectors, there is plenty of evidence against rent controls.

The market looks like it will continue to function as it is for the foreseeable future.

‘You’re forgetting all that awful regulation’

We promise you that we’re not. The simple truth is that the PRS has adapted to changes in legislation in the past and will continue to do so in the future. We may not like it, but it’s simply one of the costs of doing business, whatever the sector.

Is there a future in buying investment properties?

While pursuing Reddit recently, we actually saw one poster making exactly the sort of point we’re making here – that rejoicing in the demise of landlords is not only premature, but ignores the fact that they are vital to the housing sector.

That truth is what will keep landlords and property investors active in the market. Some will leave, this happens year in year out, others will look at the price of property, or the availability of portfolios and dive in.

Headlines about falls in property prices obscure the fact that prices are still rising, they are just doing so more slowly. The UK is some distance from property deflation and according to the Office for National Statistics, prices rose 6.3% in the last year.

As well as prices, rents are also continuing to increase in parts of the UK, partly driven by increases in mortgage repayments, and partly by the healthy demand for rental properties which outstrip demands.

Leaving taxes aside, that’s 6.3% growth simply on the property, with no regard to the potential rental income. Savings rates are currently around 5.05% making property a better option at present.

Savings rates are notoriously slow to follow changes to the Bank of England base rates, leaving savers frustrated. With the base rate widely reckoned to be near its likely peak, that disparity in favour of property is likely to increase.

Advice from the property pros

Let’s be honest – we’d love the buy-to-let market to be even more buoyant, but we are very far from twiddling our thumbs. The old saying, ‘it’s an ill wind that blows no good’ still holds true.

Undoubtedly some landlords are deciding that the BTL is no longer for them, and some of those will be leaving for the reasons proclaimed in doom-laden headlines. Others will just be retiring, or changing their investment goals.

Far from collapsing the PRS, this presents some excellent opportunities for investors looking to either expand their holdings or to engage with the market for the first time. Available opportunities and good prices are manna from heaven.

We’re not suggesting that you should drop everything and get into property or buy-to-let investment right this second. But nor should you believe that the market is doomed and that governments are out to destroy it.

This is exactly where our knowledge and experience can help you clarify your goals and the best way to achieve them. There are great opportunities in the market right now.

In summary…

If we have managed to at least convince you that it’s not all doom and gloom, then we’ve succeeded in our goal. Quality rental properties are very much sought after and the market is offering no realistic alternatives to the PRS.

We’ll not pretend it’s all rosy – it’s not – but that is true for everyone at present, not just landlords and investors. That might affect your decisions regarding investments, but it doesn’t mean that there aren’t compelling reasons to investigate further.

Pick up the phone or drop us an email and we can sit down and help you understand where your goals might align with the buy-to-let market. If all you’ve seen recently are headlines, you may be surprised just how much is out there.

Are people still buying investment properties? Bet your socks they are!

Written by Ross MacDonald, Director of Sales & Cofounder of Portolio

Get in touch on 07388 361 564 or email to [email protected]