Is property still a worthwhile investment? Below, we look at why it’s still worth being a landlord in 2024.
Over the last few years, media coverage of the PRS has been consistent in its anti-landlord rhetoric. Combined with tougher legislation and ongoing mortgage rate pricing changes, it’s no surprise that many property investors are on the fence about selling up. So, is it still worth being a landlord? Below, we discuss why you should invest and how to ensure your plans are successful.
Nobody said it was easy (and if they did, they were lying)
As we know, becoming a landlord is not a ‘get rich quick’ scheme. It’s a long-term investment that requires an understanding of how the property market works and a level of resilience to weather the storms as they come.
Depending on how involved you are with the day-to-day running of your portfolio, there can also be a lot of work that comes with property investment. Mortgage application admin, tenancy documents, insurance renewals, keeping up-to-date with safety inspections and more! That’s why many landlords work with letting agencies to help them handle this extra workload.
Is buy to let still worth it?
As mentioned, many challenges have shaped the property market over the last few years: the economic fallout from Liz Truss’ mini-budget, changes to legislation around Section 21 “no-fault” evictions, and increasing costs, to name a few. However, landlords continue to reap the rewards from their property investments.
Rising rents
Average rents continue to rise year-on-year, helping you maintain profitability amidst economic volatility. Zoopla’s latest rental market report showed rents have increased by 6.6% in the year to April 2024, with regions such as Newcastle and Edinburgh showing fantastic annual rental growth of 10% and 9.1%, respectively.
Furthermore, if you exclude London’s micro-market from the overall UK market, rental growth across the UK is more positive, at 8% year-on-year. The pace of rental growth is slowing, as is necessary for rental properties to remain affordable for tenants. Still, this latest data should reassure you of the stability of the returns from your investments.
Property agencies such as Rightmove and Zoopla publish quarterly reports highlighting regional performance, helping you better determine where to focus your investments.
Tenant demand
As first-time buyers continue to struggle to raise deposits or secure affordable mortgages, the rental market is under pressure to provide alternative housing. The supply and demand disparity has taken control of the PRS over the past few years and is one of the main reasons rents have risen to the extent they have.
However, we are starting to see demand ease. Rental demand is down 25% over the last 12 months, but according to Zoopla, 15 households are still chasing each rental home. This remains over double the pre-pandemic demand levels, with just six applicants per property on average between 2017 and 2020.
Top-performing property types
Focusing on more complex property types has never been more important for landlords looking to boost the returns on their investments. Properties such as HMOs, Multi-Unit Freehold Blocks, and even Holiday Lets continue to outperform ‘vanilla’ buy to lets in rental yields.
It’s worth noting that if you’ve been a landlord for less than a year, the number of lenders that will offer a mortgage to you on these more specialist property types is limited. Typically, buy to let lenders require a minimum of one year of letting experience. However, here at MFB, we can access some lenders that will accept applications even from first-time landlords – get in touch with our mortgage experts to learn more.
As you can see, despite all the doom and gloom reported by the media, there is reason to be optimistic about your buy to let investment future. Rents are up, tenant demand is strong, and greater profits can be made with the right properties. So yes, it is worth being a landlord in 2024 (and beyond).
To speak to an expert about your property investment finance, call 0345 345 6788 or submit an enquiry here.
Mortgage Finance Brokers (MFB) specialises in buy to let, homebuyer and commercial mortgages, and short-term property finance. Registered office 17 Kings Hill Avenue, Kings Hill, West Malling, ME19 4UA. Company registered in England and Wales No. 2502713. Mortgage Finance Brokers Limited is authorised and regulated by the Financial Conduct Authority (313537) to transact regulated mortgages.