Is It Time To Shore Up your Investments?

Posted on October 27, 2010 by editor
Posted in Economy News, Investing & investments, Money & Tax Tagged consolidate, investments, property

I have read some pretty fired up responses to the expected fallout from the latest government cuts and spending review. The truth if the matter is that we have not been in this situation before, so we are all riding the wave without knowing where it will take us.

Boom Buyers Need To Make A Decision

If you are one of those newer landlords who bought in the height of the boom and leveraged your properties with maximum loan to value, then you may very well be in trouble, especially if you bought 1 bedroom flats, which have little leeway to do anything to increase sale or rental returns.

The good news here is that the interest rates are likely to stay low for a long time yet so you may be able to ride out the wave if you hang on.

Divorce & Job Losses Can Change The Landscape

Its been said that the potential of up to 500,000 redundancies in the public sector over the next 4 years will create a rise in arrears for landlords, together with a fall in demand due to younger tenants going back home to live with their parents. This is possible in some areas of course, particularly those who may go home after UNI and are finding it difficult getting work straight away.

Another sad truth about financial hardship is that it often brings about divorce and separations. Many will end up in rented accommodation.

However, together these situations represent an opportunity for landlords to offer flat shares or HMO’s and multi lets. I think that this will become more accepted in the long term. Multi tenanted housing has received somewhat of a bad press over the last few years, which harks back to the days of “Rigsby.” I have seen some fabulous housing as HMOs etc and lets face it, if they aint building much housing, and folks cant afford to buy until banks untie the finance knot, where are they going to live? Many people who will enter the rental sector will need to keep costs at a minimum. Shared housing accomplishes this.

LHA Changes To Rent

investments I doubt whether the changes to LHA rental costs will have much of an impact on the rental sector as a whole , because the majority of landlords don’t take LHA tenants anymore after the previous government changed the payment rules. If they are your unless they are your core business you should consider diversification by having some private sector rents and some LHA to balance things out.

The UK market is a volatile one which is prone to many ups and downs. If you are solely a trader or solely a landlord you will be more prone to the ups and downs of the market place. Having all your eggs in one particular basket will make life harder in the long run unless you build in lots of equity from day one by purchasing at low values, and by hanging on and not selling over the very long term.Buy To Let is not a get rich quick scenario.

Shore ‘Em Up Or ship ‘Em Out!

All we can do is try to mitigate any potential losses and shore up or sell off any under performing areas of our portfolios. Take a long hard look at the properties you possess, can they work harder for you?

If you are having problems with your bank loans-we can help-check out our Commercial restructuring pages.