"The reality is, with a subdued market expected in 2024, it is highly likely that there will be some good bargains available. And with finance predicted to become more accessible, there should be something for all investors."
- Allison Thompson - LRG
2023 has proved a tricky year for property investors, but it’s also provided some opportunities that haven’t been available for the last few years.
On the one hand, the rises in base rates which have fed through into mortgage rates since September 2021 have put pressure on existing investments and meant that investors have needed to work out very carefully whether deals stack up at higher mortgage rates. And for HMO landlords, things have been particularly tough, with the increased cost of utility bills on top of higher finance costs.
But at the same time, the ‘froth’ of rising prices over the last few years that has made getting good deals extremely difficult, has gone. That means, although prices haven’t fallen anywhere near as far as expected, there have been much better bargains available this year, particularly where vendors need to sell quickly.
In particular, we have seen a big uplift in some great quality properties coming onto the market via auctions.
In late 2022 we extended the reach of our highly successful auctions team, First for Auctions, across our own business and in 2023 launched a nationwide business-to-business partnership arrangement. This was in response to significantly increased interest in consumers buying and selling residential property at auction, which is typical of an economic dip and is born out in our figures.
2024 is definitely the year when professional investors will see growth. This is already apparent in the increasing number of portfolio landlords - 18% of landlords now own 50% of rented homes within the private rented sector alone (i.e. excluding institutional and public sector landlords). This has come about as a result of many already well-aired factors – particularly, but not exclusively, the gradual emergence of the Renters Reform Bill and an increase in regulations.
Economic circumstances have also necessitated landlords becoming more financially astute and making adjustments – from structural changes to their portfolios to physical changes to their properties (specifically in relation to energy efficiency) – to deliver a better return. It is now not uncommon for us to receive new instructions from landlords with as many as 50 properties; a few years ago, this was rare.
The reality is, with a subdued market expected in 2024, it is highly likely that there will be some good bargains available. And with finance predicted to become more accessible, there should be something for all investors.
Although there have been reports of landlords leaving the market because of increased regulation, in reality, a lot have just naturally ‘retired’. Buy-to-let was ‘born’ in 1997 and many landlords are now over 55, so, having seen great price and rental growth – particularly during the pandemic – some have simply reached the end of their investment journey and cashed in.
While we have reservations about elements of the Renters Reform Bill, we welcome and encourage improvements in standards across the board and are pleased to help our landlord clients, whatever their size and situation, in implementing them.”
And, in England, with the 2025-28 deadline for minimum EPC ratings of C being scrapped, and the Government not intending to move forward with abolishing Section 21 until the court system has been vastly improved, things are looking rosier for 2024 than they have been this year.
