It looks as though 2018 will be a mixed year for landlords. Some will start to feel the pinch of the legislation that’s recently come into force, such as the loss of mortgage interest relief, while a number of tenants may give notice, due to incentives to buy. At the same time, there are likely to be some good deals around for landlords looking to expand their portfolios. For the rest, who may not have the means to buy in the next 12 months, it’s a good opportunity to take stock of their portfolio and make small improvements where needed to help translate rental income into better profits.
Do your due diligence before acquiring new properties
Landlords with four or more properties who are planning to expand their portfolios in 2018 need to make sure they understand the new portfolio lending criteria that came into effect on 1st October. With the additional information that lenders now require for the mortgage application, all landlords should be prepared to monitor the value, income, expenditure and level of borrowing associated with each investment property.
Landlords who took out the high loan-to-value mortgage deals that were available in the past might find that although they want to buy, they can’t because they’re too highly leveraged. In that case, 2018 could be a year of reinvesting rental profits into paying off mortgage loans in order to reduce the LTV of the portfolio and aim for LTVs of 75%.
Check the market for bargains
Those landlords who are able to buy next year are likely to face less competition from other investors than in the past, as many will be holding back in light of the ongoing profit squeeze. In addition, the continuing pressure on affordability for homeowners means that well-capitalised landlords should be able to take advantage of some good deals in cheaper parts of the country, particularly from vendors who are under some time pressure to sell.
