Worried About Recession News? Here’s Why NOW Is The Ideal Time to GROW Your Property Portfolio

Worried About Recession News? Here's Why NOW Is The Ideal Time to GROW Your Property Portfolio

The Covid 19 stamp duty holiday did as it was intended: helping people finally buy residential properties as homes, or helping them build their investment property portfolios. 

The holiday led to a property purchase boom not only in London with 52% more in 2021 compared to the past year, but also in the other regions as well. And although the stamp duty holiday ended last 1st of July 2021, and taxes returned to pre-Covid rates, residential property as an investment still remain attractive. 

investment property portfolio

What About The Latest Rise In Interest Rates? Have They Dampened This Enthusiasm?

Since December 2021, the Bank of England has started raising interest rates to mitigate the rise of inflation. Interest rates on residential property mortgages are currently at 2.9%, increasing to the highest point in the last ten years. 

But these raises in interest rates have not deterred property buyers. In fact, in the latest Landlord Panel research for Q1 2022 by BVA BDRC, an internationally recognised market and consumer research agency, first time owners and seasoned property investors are looking to buy more properties in the next 12 months. 

The reason for this attitude is the positive expectations they have over the capital gains and rental yields in the coming months. As these interest rates tamp down on general interest for purchasing property, it has driven the rental market into overdrive. Landlords are expected their gains to be very good. 

They expect capital gains to rise as high as 9% and rental yields to be at 8% (compared from last year) and the rental market has grown 6%.

Covid 19 Has Changed The Face Of How People Want To Live And Work

Even as the pandemic lockdowns have been lifted many offices have continued to offer their staff the option to work in the office, remote (or from home) or in a combination of both. 

This employee-centric approach has benefited many staff workers and has caused the rental demand to rise. Landlords and property investors are now looking for investments in commuter towns, suburban areas close to the city centre, and in regeneration developments that offer both the space to set up a home office and close to all the needed amenities, especially to transport links for the occasional time to visit the office every now and then. 

But because rental property very limited not only in London but in major cities in the other regions as well, housing market experts are forecasting that the rental prices will continue increasing in the next 12 months.

How would the recession affect attitudes about property investments?

If news forecasts and expectations do come true, then a recession will bump up rental demand even further. 

Why? Because residential property developments with slow down, especially in terms of funding. When they slow down, the housing gap will only widen (It is estimated that the 300K+ new homes are needed each year to answer the need for housing). 

And when as the UK comes out of this anticipated recession, there will be zero or little new housing properties availang for renting, making now the best time to make property investments. And for landlords and investors looking to expand their investment property portfolios, the ones with the right investment strategies in the right areas could do very, very well. 

If you’re looking for advice about property investment, about making the most of the current housing market situation, or simply want additional information or knowledge about picking the right investment in the right areas, call us on 02079236100 or book a chat with our team today.

Brett Alegre-wood
July 28, 2022

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