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The private rented sector has doubled in size since 2002, and the latest data from the English Housing Survey shows that 19% of households are now rented.
The only downside to a slow down in the property market is that it could, in the short term, hold back the capital growth of your existing portfolio. However, due to a long term shortage of homes, it’s likely capital growth will bounce back and in the meantime, if you manage to get hold of more properties at a discount, you should be able to balance and even improve your returns.
And don’t forget that if interest rates fall, your monthly mortgage costs could go down as well!
Overall, as long as you have a strong portfolio and your Buy to Let properties generate a good return, market slowdowns can actually be a good opportunity to make some money.
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If you buy a property for £150,000, which generates annual rent of £7,500, the gross yield is 5% (£7,500/£150,000).
However, if you can secure the property for £135,000 and retain the annual rent of £7,500, you boost your yield to 5.5%.
October 2016
Post Brexit - Why a slowdown can be good news for landlord investors
Market wobbles can actually be quite helpful from an investment perspective, for two reasons.
Firstly, if enough buyers hold off, people who need to sell might be ‘spooked’ into reducing their prices or accepting lower offers if they’re worried prices might drop further.
If you can buy at a discount from one of these sellers and rent the property out at the same level of rent you would currently, your yield will go up.
Secondly, if people aren’t buying, they are either living at home or rent a property. That means the demand for your Buy to Let should go up, as long as it’s in good condition.
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