Whether you are a landlord with just one property or you already have a selection of properties under your belt, in the current climate, one question is likely to be on your mind. Is now a good time to increase your property portfolio?

Weighing up the options

Of course, we aren’t going to tell you no. But equally, we are aware it could be seen as a risk when finances may be stretched. The most important thing is to weigh up the pros and cons to decide if expanding your property portfolio is the right move for you – and how best to maximise your returns if you decide it is.

Certainly, there are opportunities to be had. The strained housing market means that we are witnessing some reductions in property prices as sellers struggle to sell amidst the cost-of-living crisis and high mortgage rates. Although the average house price is higher than 12 months ago, they rose only 1.9% in the year to May and are £7,000 below their September 2022 peak, according to the Office of National Statistics.

And, although there are regional variations in the trend, many properties are still selling well via auction, where good bargains can be snapped up.

Another positive for landlords is that rental prices are on the rise thanks to increased demand. Across the UK, private rents grew 5.1% in June, rising faster than they have since records began, according to the ONS. They are expected to continue to rise, increasing rental yields further. Although this brings its own risk of tenant affordability, there is no shortage of people looking to rent – with high property prices and high mortgage rates, people are finding it harder than ever to get on the property ladder. Renting is therefore, their best option.

What to consider if you do decide to extend your property portfolio as a landlord

So, expanding your portfolio may well be an attractive option for you, but you also need to consider wider market changes such as the Renters’ Reform Bill which will give tenants more power and landlords less. The changes are designed to give tenants a fairer deal, but that has implications for landlords – such as a right to have pets in the property – which you will need to work through once the changes come into force.

You will also need to consider your LTV rate if you aren’t a cash buyer. The impact of increased interest rates saw buy-to-let mortgage rates reach their highest rate in 12 years in July. Inflation seems to be falling so rates might come down again soon, but careful consideration needs to be taken around affordability and what LTV you can realistically achieve.

As well as accounting for ever-changing factors such as these, to ensure you get the most out of extending your property portfolio as a landlord, you will need to think hard about location and look closely at how rents are performing in the locality you are targeting. Is demand strong and justified or are you looking in a weak area with little rental demand? Obvious hotspots include up-and-coming areas or those near institutions such as universities and training colleges where there will always be a higher rental demand to tap into.

Ultimately, the decision is yours. But the opportunity is there.

If you are expanding your portfolio, we have a specific Landlord Portfolio Insurance product for you. The multi-property policy can cover between two and 50 properties and could cost you less than individual policies, as well as being easier to arrange. 

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