Our predictions for property investment in 2024
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.
The rises in base rates which have fed through into mortgage rates 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. Although prices haven’t fallen 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. So much so that in 2023 our highly successful auctions team, First for Auctions, launched a nationwide business-to-business arrangement with other estate agents.
Will 2024 be a good year to invest in property?
Allison Thompson, National Lettings Managing Director at Leaders Romans Group, believes 2024 will definitely be the year when professional investors will see growth. She explains, “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 ( 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 seen landlords become more financially astute and more likely to make 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.”
With a subdued market expected in 2024, it is highly likely that there will be some good bargains available.
The impact of the Renters (Reform) Bill
Although there have been reports of landlords leaving the market because of increased regulation, many have naturally ‘retired’ having seen great price and rental growth – particularly during the pandemic. The Renters (Reform) Bill may reduce the number of new entrants coming into replace these retiring landlords though, particularly if new entrants believe there is more risk to them.
Despite the harsher environment for investors these days, compared to 10 or 15 years ago, Allison says, “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.”
With the 2025-28 deadline for minimum EPC ratings of C being scrapped in England , and the Government not intending to move forward with plans to abolish Section 21 until court reform has happened first, things are looking rosier for 2024.
However, investing in property is specific to each local area and individual landlords’ objectives, so it’s important to make sure you work with local property experts to help you decide what to do in 2024.
Want to know more about the lettings services LRG can offer you? Call us on 01344 753100 and quote that you’re an NRLA member to find out more about the exclusive discount* we can provide.
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