Over 5000 Leicester landlords are planning to expand their property investment portfolio and this number grows exponentially when considering the rest of the buy to let landlords in the UK who are planning on buying more homes over the next year albeit the challenges and changes made to the private sector recently. Aldermore, a specialist lender specialising in buy to let mortgages, research shows approximately 41% of portfolio landlords (those who own more than one property) have the objective to grow the number of flats, houses and other units they own for the purposes of renting out.
What affect does this have on the Leicester property market?
Most landlords in Leicester are optimistic about the future of the Leicester Rental Market, Leicester has the fastest growing rents across the UK, still rising house prices whilst West Midlands’ house prices grind to a halt and, unlike Nottingham, we don’t have to deal with silly licensing schemes such as Selective Licensing (although, if our local authority have their way, this will change soon). Landlords in Leicester are happy with their investments even with the doom and gloom overshadowing the property market and reports claiming the property market will shrink. Many landlords in Leicester who are looking to expand the number of properties they own still see the Leicester Rental Market as a fantastic investment opportunity. Property prices are still affordable, yields are high and there’s little risk of property prices falling any time soon.
Property is an even more attractive investment when we consider the uncertainty faced by the stock market with FTSE 100 companies issuing profit warnings, the topsy-turvy world of Crypto-Currency investing and savings account rates only reaching 1.5% and government bonds only achieving a maximum of 2% yield. It is clear why Leicester is the perfect place for investors to place their money. A two bed property for sale on Stoneywell Road, LE4 for £135’000 in Beaumont Leys, Leicester and rented out for £600 per calendar month is going to earn a gross yield of 5.33% if the property is rented out as a two bed house. With property prices still rising, you can also anticipate capital growth but you shouldn’t purchase solely on the expectation of capital growth. House prices can fall as well as rise. Retired homeowners have seen a growth of £159’000 in their property’s value.
However, if they do fall, what history has taught us is that regardless of what the economy throws our way, including the Dot Com Bubble burst in the 90’s and the 2008 financial crisis, property prices always bounce back and with buy to let being a longer term strategy, this is good news! Over the longer term, with increasing demand for property and a falling supply of land, especially preferring to rent or simply being unable to afford to buy, landlords, especially those investing in property in Leicester (especially Belgrave and other LE4 postcodes), always come out on top!
How do the number of landlords stack up in Leicester?
Leicester boasts a whopping 18’613 landlords, of which more than 12’754 of these own more than one property, in fact, of these Leicester landlords, a total of 26’768 properties are owned between them whilst only 5’859 landlords in Leicester own just one single buy to let investment in Leicester. 3’817 of the 12’754 landlords in Leicester (or 29% of portfolio landlords) own more than ten properties.
What does this mean for landlords looking to expand their portfolio?
When we apply the data released by Aldermore to Leicester, it shows that 5’229 landlords in Leicester are planning to expand their portfolio of properties over the coming year.
On the other hand, Aldermore also shows that 8% of private landlords in Leicester plan to reduce the number of properties they own. This is likely down to continued government intervention in the private rental sector and many landlords complain about the increased taxation and costs of compliance, as well as other limitations placed on them as a result of an overhaul of the overall British housing market. Some landlords also feel tenants are excessively protected at the disadvantage of the landlord especially with regards to support from the local authority who would rather see a landlord lose their £300’000 property to their lender who wants to repossess the property due to mortgage arrears caused by tenants failing to pay their rent who are advised by the local authority to continue to live in the property after eviction notices have been served until the bailiffs physically remove them; should tenants deviate from this unlawful advice regularly handed out by local authorities up and down the country, they’ll be deemed to be voluntarily homeless and the respective local authority will have no obligation or duty of care to rehouse or otherwise support them in any way.
There’s no denying that the buy to let market has taken a large hit in confidence, especially with the new private rented sector regulations and new tax laws introduced by the government limiting mortgage repayment tax relief until eventually landlords receive no tax relief for payments made towards their mortgages. However, the overall consensus is that the Leicester Buy To Let Environment is optimistic with Leicester private landlords viewing buy to let as a good investment even with the plethora of latest negative changes in favour of tenants over landlords.
Buying property in Leicester is no easy task, especially if you’re looking for the perfect buy-to-let investment; low cost, high yield, minimum work required. This is why we would always recommend you use a reputable estate or letting agent to help find the property and/or (if you already own a property in Leicester) manage the property to help you as the landlord maximise your returns. We recommend using Harry Albert Lettings & Estates as your preferred property manager. They offer cost effective management solutions and even generate high incomes for their landlord clients during void periods and maximise the amount of rental income generated from the property. They also have a very clear, easy to understand fee structure and they don’t charge any renewal fees. For full property management, you’ll only pay £100 as a one off set-up fee and £99 per new tenant required with a monthly charge of just 7% of the monthly rent. This means, if you had an empty property you’d like to rent for £500 per month and instructed Harry Albert Lettings & Estates to find a tenant for your property and manage it, not only could they let the property rapidly because of their database of waiting tenants but you’d pay just £199 upfront and then just £35 per month for the actual management of the property. Once the tenant moves out, you’ll then pay just £99 for a new tenant. Harry Albert Lettings & Estates also provide a free basic inventory as part of the set-up fee.