Is Being A Landlord Still Viable With Rampant Interest Rates

It has been well documented in the media for the last 6 months or so that inflation and high interest rates are caused havoc in the markets and normally property is very closely linked to market performance. In March 2023 the Bank of England raised interest rates for the 11th time since December 2021 taking the base rate up to 4.25%. Obviously, this level of interest has a major impact on people who are borrowing with mortgages and credit cards being those that are most affected.

Are Mortgages and Buy To Let Mortgages Still Viable

Typical rental yields are at around 5% which means that if the market value of properties and therefore rental amounts doesn’t increase then you are losing a large part of your profit. The 4.25% base rate means that you will only be making 0.75% on your investment. If however house prices do go up then you can get some of the rental yield back but an increase in rent and property prices could means you lose a large portion of your customer pool as certain sized houses become unaffordable. It is very much down to the individual mortgage offers you can get as to whether it is viable for you to get a buy to let property and can make money from it. If you’re looking to take a mortgage out it is worth making sure you use specialist landlord solicitors to protect your interests.

An Increase In Tenancy Issues

The cost-of-living crisis affects tenants even more than landlords in a direct manner. Whilst from a landlords perspective it is more about managed debt, for a tenant it is day to day costs, affording rent, energy bills and food. For this reason there has been an increase in issues with tenants not paying rent, refusing to leave and needing to get court orders in order to remove someone from a property. The extra issue is that frequently the property is in a major state of disrepair and requires extensive cleaning once the tenants do finally leave. This is eating further in to your profit margin and shows why it is important to get good landlord legal advice to be able to deal with these situations as quickly as possible to reduce any losses incurred in the process.

Tread Carefully When Picking A Lender

Whenever there are times of market turmoil, the number of scams increases substantially. People are desperate for a better deal if they are losing money and often make rash decisions to try and save relatively little money. Be very wary of any ‘online’ deals from lenders that you aren’t familiar with, many will try and target people looking to make investments as they know they have money. If you do find you have become a victim of a scam, it is important to move quickly and contact investment fraud lawyers to get on the case for you. Always check and double check any company you need to pay money to and make sure they are registered with the FSA.