Higher interest rates
Improving rental yields is the key

Higher interest rates mean higher costs for buy-to-let landlords, many of whom will be considering raising rents to try to improve their yields. But setting the right rental rate is critical. Obtaining a higher return is desirable, but keeping periods when the property is empty to an absolute minimum should be the goal.

Amateur landlords should not make the mistake of believing that, just because their costs have gone up, the tenant will make up the difference. Fortunately for investors, demand is strong with one in four people in the UK living in rented accommodation and two thirds of tenants saying that they do so because they cannot afford to buy. There are more students and more singletons now than ever before, and both groups are more likely to rent.

Meanwhile, net immigration into the UK, and particularly into the South East, has kept rental demand high.

Hence the prospects for landlords successfully negotiating a rent rise looks good, although finding the right level is the key. Establishing the rental value is just another type of valuation, and all valuations are based on comparable evidence. The problem for many private landlords without letting agents is that they simply don’t have access to the same amount of information.

Some contracts provide the tenant with an option to renew for two or three years based on the level of inflation. However, these contracts can often end up being a better deal for the tenant rather than the landlord.

If you would like to find out more, please email or contact us for further information.

This article is for your general information and use only and is not intended to address your particular requirements. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without appropriate professional advice after a thorough examination of their particular situation. Your home may be repossessed if you do not keep up repayments on your mortgage.

Article date: 09.07