Will 2024 be a good year to invest in property?
Tue 05 Dec 2023
2023 has proved a tricky year for property investors, but it’s also provided some opportunities that haven’t been available for the last few years.
On the one hand, the rises in base rates which have fed through into mortgage rates since September 2021 have put pressure on existing investments and meant that investors have needed to work out very carefully whether deals stack up at higher mortgage rates. And for HMO landlords, things have been particularly tough, with the increased cost of utility bills on top of higher finance costs.
But at the same time, the ‘froth’ of rising prices over the last few years that has made getting good deals extremely difficult, has gone. That means, although prices haven’t fallen anywhere near as far as expected, there have been much better bargains available this year, particularly where vendors need to sell quickly.
In particular, we have seen a big uplift in some great quality properties coming onto the market via auctions.
In late 2022 we extended the reach of our highly successful auctions team, First for Auctions, across our own business and in 2023 launched a nationwide business-to-business partnership arrangement. This was in response to significantly increased interest in consumers buying and selling residential property at auction, which is typical of an economic dip and is born out in our figures.
Will 2024 be a good year to invest?
According to Allison Thompson, National Lettings Managing Director of Leaders Romans Group (which we're part of), this is definitely the year when professional investors will see growth. She explains, “This is already apparent in the increasing number of portfolio landlords - 18% of landlords now own 50% of rented homes within the private rented sector alone (i.e. excluding institutional and public sector landlords). This has come about as a result of many already well-aired factors – particularly an increase in regulations.”
Allison points out that, “Economic circumstances have also necessitated landlords becoming more financially astute and making adjustments – from structural changes to their portfolios to physical changes to their properties (specifically in relation to energy efficiency) – to deliver a better return. It is now not uncommon for us to receive new instructions from landlords with as many as 50 properties; a few years ago, this was rare.”
The reality is, with a subdued market expected in 2024, it is highly likely that there will be some good bargains available. And with finance predicted to become more accessible, there should be something for all investors, not just in 2024, but also in the run up to Christmas, which can offer some great value deals as many sellers are keen to agree sales before the holiday.
Should investors worry about the Renters (Reform) Bill?
Although this bill isn't applicable in Wales, we do have some landlords who also have investments in England. There have been reports of landlords leaving the market because of increased regulation, in reality, a lot have just naturally ‘retired’. Buy-to-let was ‘born’ in 1997 and many landlords are now over 55, so, having seen great price and rental growth – particularly during the pandemic – some have simply reached the end of their investment journey and cashed in.
Despite the harsher environment for investors these days, compared to 10 or 15 years ago, Allison explains, “While we have reservations about elements of the Renters (Reform) Bill, we welcome and encourage improvements in standards across the board and are pleased to help our landlord clients, whatever their size and situation, in implementing them.”
And, in England, with the 2025-28 deadline for minimum EPC ratings of C being scrapped, and the Government not intending to move forward with abolishing Section 21 until the court system has been vastly improved, things are looking rosier for 2024 than they have been this year.
However, investing in property is very specific to each local area and individual landlords’ objectives, so it’s important to make sure you work with local property experts to help you decide what to do in 2024. Get in touch with your nearest branch in Cyncoed, Pontcanna, or Roath and we can help you work out what’s the best area and type of property to invest in, or how to adjust your portfolio so it continues to deliver a healthy financial return.