Risk can’t be eliminated………but we can reduce it for you
As we dive into 2021 , I wanted to share my thoughts on how we can help protect your rental investment and to give some of the reasonings as to how this can be done and why.
If you Google the impact that Covid 19 has had on the rental market you will get bombarded with a huge range of numbers, and in honesty some of them make for some concerning reading. BUT…. As with anything there needs to be a comparison in order to draw a conclusion and to quantify that risk ….. only then can we get an idea of realistic exposure on the investment.
Brace yourself for the numbers…………………around 840,000 renters are in arrears. A survey by Barrows and Forrester revealed that almost a fifth (18%) of tenants said they have struggled or failed to pay rent during the pandemic, 23% of Landlord said their level of rental income has dropped, whilst 46% of tenants have not seen their financial situation worsen. This does not read well on the surface, however, let’s put this side by side with the stock markets. On the 12th March 2020, the FTSE 100 index of leading Company shares lost 10.87% (second biggest rout on record) which took the total losses on the London market inside a 1-month period to more than £540 Billion. So, not that bad in comparison.
However, the market has changed over the past 15 months. Absolutely. Unequivocally. Despite this…. rental levels still increase and the real estate investment market has both limited volatility and strong stability. If you look at other comparative yields below, it significantly outperforms other investment classes.
When the Section 24 Tax alterations came in (2017) there has been a noticeable change of perception from Landlords which have only heightened in the past year or so. Being a landlord is no longer what was once seen as a ‘hobby’ investment. Its not something to ‘have a go at’. It is a highly stable and lucrative investment class that needs to be 1) structured correctly on purchase or retrospectively 2) managed professionally to ensure all legislation ( currently around 160 pieces) is abided by and does not present you with extra unnecessary risk 3) secured……..properly.
In 2020 we were delighted to launch our Rent Protection and Legal Insurance Cover. If you had an asset that produced £9000 on income per annum, and I said that for only £320 a year – you can guarantee that gross income………. I am pretty sure you would snap my arm off. Why ? Because you are getting a 2724% return on your invested cash ……..that £320 is securing that £9000 rental income. More importantly, property investment is excellent as you can see from the above – but the foundation of that performance is a stable and consistent income stream. Yes , capital appreciation should be factored into the equation, but , the beauty of rental property is its dual performance….. growing in value ( with a mid to long term hold strategy) whilst producing income on a monthly basis. The moment that yield stops, whether that is due to downtime between tenancies, void periods or tenants that are struggling to pay their rents – the asset is not performing.
Yes, your boiler might need replacing. Yes, you should replace the carpets when they are tired. And yes, you should get a Lettings agent to manage your property…… and not an estate agent. What’s the difference? Well….. you wouldn’t get your teeth looked at by your optician…. both your teeth and your eyes are on your head……… but they are completely different areas of specialism. Both Letting Agents and Estate Agents deal with property, but the difference between them is vast.
So, in conclusion….. can we eliminate risk from you…our Landlord. No. But we can reduce it for you, and, we will manage your property or portfolio as it should be managed.
If you would like any more information ……… please give us a call.