It found that 84% of landlords are making a profit from their lettings activity and 44% rate their expectations of their own letting portfolio ‘good’, or ‘very good’ for the next three months.
However, 83% of landlords have found obtaining buy to-let finance more difficult in the past six months and just 16% of landlords intend to purchase at least one more property in the next 12 months - an all-time low.
This slow down in BTL investment is evident in the latest mortgage figures, with lenders reporting a 42% fall in loans to landlords as tax changes take their toll. The Council of Mortgage Lenders said lending in March 2017 was £21.4bn, down 19% on the year before, almost entirely due to landlords withdrawing from the market.
According to Armistead Property, tighter Bank of England lending rules combines with rising taxation on rental income, has made the BTL market far less financially attractive than it was two to three years ago.
Peter Armistead, Director of Armistead Property, commented: “Britain's two million landlords are facing assaults from both the taxman and the Bank of England. Many landlords are being forced to put a hold on expanding their portfolios, due to the tougher mortgage criteria for BTL loans. The mortgage restrictions are very bad for landlords and pose a major threat to BTL investments.
“For those landlords that can secure mortgages, they may experience falling yields and monthly profit margins will be squeezed. Now more than ever, investors need to make sure they have a solid business plan which is risk management focused.
“Investors need to carefully assess any purchases and make sure the properties they already own are operating very efficiently. If a property is under-performing, then there are a few things to consider, such as managing the property yourself, rather than using an agent; ensuring all the maintenance is up to date; and carrying out renovations to improve the yield.
“If investors are acquiring buy-to-let properties, it is vital that they purchase below market value in the right area. This may mean taking on properties that require refurbishment. As long as all the refurb costs have been accurately factored into cashflow with a contingency budget, then investors have the potential of higher yields on ‘nearly new’ properties.
“As a seasoned property investor, I have built a successful, mid-sized portfolio of buy-to-let properties in South Manchester. The most important lesson I have learned is that landlords need to treat their property as a business. Treat it seriously and get yourself surrounded by a great team of professionals who are better than you.”
