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Is being a landlord still an attractive option in the current climate?

Is being a landlord still a profitable investment option in the current real estate climate? This is a question that many potential property investors are asking themselves. Buy-to-let investments have been popular for the last 25 years, with low-interest rates and a constantly increasing property value. However, things have changed recently, and landlords now face many obstacles.

For starters, the tax relief on buy-to-let mortgages was reduced in 2015 by the government, which made things harder for property investors. A three per cent stamp duty surcharge on additional property transactions and new safety and energy performance regulations further complicated the situation. Michael Gove’s proposed plan to increase tenants’ rights also pressures landlords. The condition worsened after interest rates rose significantly at the end of 2022.

Despite these obstacles, many property investors are still finding success as landlords. The current shortage of rental properties has led to an all-time high in rental prices. In many areas of the country, demand is outstripping supply, resulting in increased rents and a favourable position for landlords. Many landlords also see rent increases of up to 25% on renewals to keep up with market values.

However, it’s essential to remember that the current rental market favours landlords without mortgages. Those with mortgages face more pressure, and those who over-extended themselves in the past decade may struggle. Some estate agents report crying out for new properties to add to their portfolios, and high demand is driving prices up. However, many potential landlords are reluctant to enter the market, instead choosing to keep their money in the bank due to current interest rates.

The rental property market is currently divided, with some landlords thriving and others struggling. For those considering investing in rental property, assessing their portfolio and considering the long term is essential. It’s also important to consider the current climate and the potential obstacles they may face as a landlord. Despite the challenges, many landlords are still finding success in the current market, and for those willing to take on the challenge, buy-to-let investments can still be profitable.

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Thomas Winfield
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