The Secret To Successful Property Investment In Today's Challenging Market

With the current changes affecting the rental property market, it’s unsurprising that landlords are leaving the sector at an unprecedented rate. 2022 saw a reduction of 66 properties on the rental market every day, with 35,000 more properties sold by landlords than bought last year.

So, with the traditional buy-to-let model rapidly becoming an unattractive proposition, property investors are looking at different ways to make money in the property market. For those with a keen eye, there are still opportunities to turn a profit, with purchase, renovation, and sale, becoming an increasingly popular approach to property investment.

What caused this landlord exodus?

Over the last year, the buy-to-let market has gone through some significant changes that have pushed many landlords to breaking point. Mortgage rates have soared following the Bank of England’s rates hikes over the last year, doubling from previous levels. However, with changes brought in by the Renters Reform Bill, landlords can’t simply cover their increased costs by raising rents. The abolition of Section 21 evictions (no fault evictions) also means that landlords can no longer simply give 2 months’ notice if want to get their property back.

The final straw for many landlords will be the increase in Capital Gains Tax from April 2023. The decision to reduce the tax-free exemption from £12,300 to £6000 may accelerate the decision for some landlords to sell their properties now in order to get ahead of the changes.

An increase in ‘distressed’ sales could mean AN opportunity

As both landlords and homeowners feel the pinch, with rising prices and soaring interest rates, the number of distressed sales is likely to increase. For those with a good eye for property, that means the opportunity to purchase properties at a below-market rate, which can then be renovated and sold or simply ‘flipped’ for a quick profit.

Using a bridging loan can be a good way to facilitate this type of purchase, as they can be arranged quickly, something that is essential if the property is being sold at auction. Since the credit crunch in 2008/9 fast bridging loans have been widely used to facilitate this type of purchase, especially as bridging interest rates have virtually halved over the last 12 years. 

For those unfamiliar with bridging finance, it’s important to be aware of the other costs involved in this type of finance, so using a good bridging loan calculator is essential to ensure that you aren’t caught out by unexpected costs.