Is Now a good time To Sell My Property Portfolio? It’s a very good question and one we are getting asked more and more!
Let’s take some time to consider what is happening and how it can affect you as a portfolio owner.
The Scottish Government have recently announced plans to further restrict landlords on the control and options they have regarding their buy-to-let properties.
Maybe this has influenced you to consider if you still want to continue being a property portfolio owner or has it even been the straw that broke the camel’s back and you’re ready to take action?
Let us take a look at the current situation for portfolio landlords in Scotland along with the current demand for portfolio purchases to help you weigh up your options.
What are the latest Government changes and how could these affect you?
On 6th September 2022, The Scottish Government announced a combined rent freeze and moratorium on evictions with the aim to help people through the cost crisis, this was then published on 3rd October 2022. This legislation will initially be in place until at least 31st March 2023. To find out more, read the publication here.
There are two parts to consider in this statement, the first is the fact that there is effectively a prohibition on any activity you can make on your rental properties – you have lost all control. The second is that this is in place “until at least” 31st March 2023. From past experience with such legislation, it would be reasonably justified to presume the restriction will be in place long after this date – just how long, nobody knows!
What these prohibitions mean to you as a landlord is that the short-term future is full of uncertainty. If the rents you are charging are low then they will stay this way, regardless of your own financial situation or security. If you’re tenants stop paying rent or are causing issues which would normally justify eviction, this cannot happen. You will need to carry the burden of the financial loss, again, regardless of your own financial situation.
Still asking “Is Now A Good Time To Sell My Property Portfolio!?” – Let’s dig a bit deeper.
Rapidly Rising Interest Rates
The Bank of England has recently increased the base rate by the biggest single rise in 27 years. This rate is used by the central bank to charge other banks and lenders when they borrow money – and influences what borrowers pay and savers earn.
Some reports say they have also predicted that inflation could hit above 13% later this year which will continue to cause rising interest rates for your buy-to-let mortgages.
If you are on a Standard Variable Rate then you will be looking at a substantial increase in monthly outgoings and likewise, if your fixed rate is coming to an end soon then you will be hit with a much higher rate when you come to remortgage.
Property Prices and Market Predictions
Scottish house prices have recently hit an all-time high with the average price passing £200,000 for the first time in June 2022. Whilst supply and demand continue to influence house price growth, there can be no avoiding that the booming mortgage rates and cost of living crisis will surely have a negative impact on the market with buyer uncertainty over affordability being at the forefront of their minds.
Many would argue that we are hitting a peak in property prices and depending on location, there could be some darker times ahead for portfolio owners who have previously purchased at top market prices or overpaid thinking values would continue to rise.
Keep track of ESPC’s latest news here.
So, what should you be doing as a portfolio landlord?
In the first place, you should assess your portfolio, which we can help with. Our analysis would include the following key factors:
- What are the values of your properties and the portfolio as a whole?
- What ratio of lending do you have on the properties compared to their current value?
- When are your fixed rates due to expire and how will this potentially change?
- Are your rents up to market rates and how does this affect your finances?
- Could you benefit from remortgaging?
- Is there potential for your cash flow to become negative over the next few years?
Based on the results of this Portfolio Analysis, we will provide advice and introduce you to the experts that will be most helpful to you in the next few years of uncertainty.
We would also provide a market appraisal to guide you through the process of selling parts or all of your portfolio if that was to be the most beneficial action for you to take. Read more about selling your portfolio with us here.
As a portfolio landlord, you need to be weighing up the benefits of the current rental income you are achieving against the potential of tenancy issues due to the cost of living, increasing mortgage rates, decrease in property prices and lack of control due to government legislation.
Hopefully, this blog has given some insight and helped with answering “Is Now A Good Time To Sell My Property Portfolio?”. To arrange a no-obligation portfolio analysis, or just to have a chat with us about your current circumstances, please reach out to us at [email protected] or book a consultation call via our website www.theportfoliobrokers.com. We also have a blog on “Who Would Buy My Property Portfolio?” that we think might be useful for you!
