Peachy prospects for portfolio entrepreneurs – Moloney

To some, he’s a visionary genius. To others, a billionaire supervillain. I’m sure you have your own opinions about the man’s obsession with space, ideas for self-drive cars and his proposal to take over Twitter. But I liked his advice to a short seller of the Twitter stock, who warned on 9 May that the platform could lose 50 per cent of its value if Musk walked away from the deal.  

Musk responded that the seller should not forget ‘to look on the bright side of life sometimes.’ 

It can be hard to keep looking on the bright side when the news agenda is so relentlessly negative. In fact, I’ve stopped watching the 10 o’clock news as it’s just too depressing an end to the evening. But there are positives out there in the world, and it really can make sense to focus on them for a change. A case in point is the UK’s buy-to-let market. 

The good news 

Buy-to-let landlords in general, and portfolio landlords in particular, have a lot to be cheerful about, as borne out by the latest BDRC-BVA survey. 

When it came to landlord motivations and outlook, the results were overwhelmingly positive, with landlords saying they generally felt more upbeat than a year earlier. 

I don’t want to drown you in a sea of numbers, but here are some of the salient figures: 50 per cent of landlords felt ‘good’ or ‘very good’ about prospects for capital gains over the next three months (up nine per cent on Q1 2021); 56 per cent felt the three-month prospects for rental yields were ‘good’ or ‘very good’ (up eight per cent ); tenant demand was reported to be ‘strong’ across all regions, with a ‘significant increase’ in demand in a third of regions, while landlord optimism for their ‘own lettings business’ maintained the five-year high recorded in Q3 2021. 

All of these results paint a very rosy picture – and the prospect for the subset of larger portfolio landlords looks even peachier. 

Landlords with 11 or more properties were the most optimistic of the lot, with 80 per cent reporting increasing demand compared with 58 per cent of landlords with one to 10 properties. 

Being informed and aware 

Of course, buy-to-let landlords are not immune to the economic forces at play in the wider world, and record demand from tenants alone cannot guarantee a successful business model in the face of the financial squeeze, including rising interest rates. 

That is why it is more important than ever that landlords seek the advice of professional brokers when it comes to the financing of their portfolios, whether they are remortgaging, expanding or rationalising their holdings, and that brokers look to trusted mortgage lenders with expertise in the buy-to-let market to find suitable solutions for their clients. 

Now that relief on mortgage interest has also been entirely phased out, it is imperative that brokers understand the implications and that landlords structure their portfolios in the most tax efficient way possible, with the help of a qualified tax adviser.  

The fact that 66 per cent of respondents to the survey with 11 or more properties and 45 per cent of those with one to 10 buy-to-lets said they were planning to buy their next property through a limited company, indicates many are already thinking this way.  

There are sunny uplands ahead for buy-to-let investors, but as the immediate economic clouds darken, they may increasingly need a good broker to light the way.