Is Buy-to-Let Finished? (August 2023)

With the current turmoil in the mortgage market, I sat down with my mortgage broker, Andrew, to discuss the state of the market at this moment in time. In this interview, Andrew shares his market insights and provides key takeaways about current interest rates. Andrew also answers candidly about the scaremongering from the media and why investors shouldn't panic about their buy-to-let properties.

I highly recommend watching the video (above) until the end to learn about the evolution amongst lenders regarding serviced accommodation; how you should decide upon a fixed term; and why your buy-to-let mortgage should be on an interest only basis. In this article, I will summarise 3 essential lessons from my chat with Andrew.

1. Long term investment

Some investors are worried about where the market is heading. They are concerned about buying a property now, because people are selling due to rising interest rates. The important thing to look at, however, is whether you can profitably hold the property over the long term. If the property will bring in a healthy profit (after mortgage payments and all expenses), you shouldn’t be worried about short-term price moves.

Property should be seen as a long term investment that can be held for decades, not a short term gamble on capital appreciation. If you have a cash flowing property in an up-and-coming area, don’t focus on what will happen in the next 6 months or a year, look 10 years or more down the line.

2. Rents are rising

It isn’t just interest rates that are going up, it is rents as well. Granted, rents haven’t gone up as much as rates yet, but eventually they will reach some kind of equilibrium. Over time, the increased costs will start to be passed on to renters, and many otherwise unprofitable properties will become more viable.

If you have long-term tenants, it may be time to review what they are paying and to increase rents to the current market rate. In some cases, however, you may decide to make a smaller increase in rents where you have a good tenant (who you want to encourage to stay in the property).

3. Serviced accommodation

One way to make a property profitable is to rent it out as serviced accommodation on sites like AirBnb and Serviced accommodation, where guests book by the night, is much more profitable compared to traditional buy-to-let. However, there are some things you need to consider before buying a property for this purpose.

Andrew says that lenders are becoming more open to serviced accommodation purchases, but it is still harder to get financing on than a traditional buy-to-let. If you have never owned a buy-to-let property before, lenders may need you to add someone who has to your application, for example.

Still not sure about buying a property right now, but want to profit from real estate? If you want to get started in property without even owning a single house, why not check out my rent-to-rent training? Tickets are only a pound, and you can get yours here!

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