Is NOW the right time to expand your property portfolio?

With experts and industry commentators predicting a short-term house pricing dip following the lift of COVID-19 restrictions, many landlords are taking time to review their portfolio and raise capital ready to take advantage of lower property prices. Sales Director, Jeni Browne, explains why you should be reviewing your portfolio today.

What is happening to the UK housing market? 

Economists and experts widely expect a short-term drop in property prices throughout the housing market, due to the economic impact of COVID-19. “History tells us that house prices tend to fall when the economy shrinks as a result of falling output,” says Richard Donnell, research director at property platform Zoopla.

With Zoopla estimating that £82bn worth of property transactions are ‘in suspended animation’, which equates to 400,000 home sales, they have compared the number of new sales agreed was running at about a 10th of the level achieved in early March. This level is “similar to what you would expect to see in late December”.

While industry experts agree that prices will fall, the level of which this will come down to is widely estimated, and in truth, the full extent of the drop is challenging to predict.  

Savills rationalise that the current economic situation is quite different from that of 2008, and is likely to have a different outcome. Lucian Cook, Savills’ Head of Research, explained: “The current inability to transact and most people’s ability to put plans on hold, mean that the medium-term outlook now is a bit different to back then.” They predict that while 2020 will see a perhaps significant fall in house prices, 2021 will then see a recovery of about five per cent.

The market is starting to see the start of the drop, with the latest research from Rightmove showing the average price of property coming to market this month dipped by 0.2 per cent to £311,950. In contrast, in April of last year, UK house prices increased by 2.1 per cent.

In contrast, despite an initial 57% drop in rental demand due to COVID-19, demand for rental properties has already rebounded by 30% in the two weeks to the 14th April (source: Zoopla). While it is likely that the economic impact of COVID-19 will reduce the previously predicted increase in rental income for 2020, rental demand continues to more than outstrip demand.

For landlords, there is a combination of factors in play which may make it the right time to think about adding to your portfolio. 

  • Firstly, house price growth has dropped off and are widely predicted to dip into decline. However, this fall is expected to be short term, so there is a limited window of time in which to pick up a bargain.
  • Rents are expected to increase a little this year, with a 5% growth in 2021 meaning the yield growth will be higher than any return you could make on savings.
  • Mortgage rates are incredibly competitive at the moment and are unlikely to go lower in the near future. 
  • Many potential house buyers will be put off from buying at this time, from a combination of factors such as disruption to their income, social movement restrictions and health implications. This lack of competition from other buyers can put you in a stronger position than usual, especially if the vendor has been waiting to sell for a while. Many people will also be put off enquiring about mortgages at this time, so savvy landlords with advice from a good broker should be able to navigate their way through the market to release equity from their portfolio - to be in a position to purchase when the restrictions lift. 


I want to take advantage of lower house prices, but I’m not sure if I have the money to make a purchase - what do I do?

If you have existing mortgages, the first step is to speak to a knowledgable broker to understand if you can remortgage and release equity from your properties. Don’t forget, although you may be in the middle of a fixed-term mortgage, it still may be cheaper to pay the Early Redemption Charges (ERCs) and move to a new product. 

Many landlords are sending us their property details, using our property portfolio review template, so we can review the properties and provide our recommendations. We can help even if you have just one property to review. You can find our property portfolio template here.

If you are just starting out, this still may be the right time for you too! Speak to one of our advisers to find out what finance options are available to you.  

To review your portfolio, please send your portfolio details to enquiry@mortgagesforbusiness.co.uk or call of our team on 0345 345 6788. Or, call me directly on 01732 471647

NB: ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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