Now is a good time to check your property portfolio’s performance

Now is a good time to check your property portfolio’s performance

13:46 PM, 16th March 2022, About 2 months ago

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The past year has seen the UK property market defy all expectations, and, as 2022 gets underway, it still seems that the only way is UP! The media is reporting property price rises, rent rises, increasing tenant demand, and lack of landlord stock.

So, for landlords, the picture is rosy … or is it?

These rising metrics inflated by the inevitable media rhetoric may have lulled some landlords into a false sense of security and apathy. Rents and prices are not the only things with an upward trajectory.

Inflation is rising and potentially affecting tenant affordability. The Bank of England base rate has increased, and further increases are predicted. Legislation and regulation is increasing. Many landlords may be coming to the end of fixed-rate mortgages, just as rates start to rise.

So, in view of the above, smart landlords should think about checking each individual property in their portfolio to see how it is performing, a bit like an annual health check!

Many commentators believe a market correction is coming – maybe late 2022 or into 2023 – so now is a good time to off-load any under-performing assets and achieve a high price for them.

The first thing to do is do the maths, or rather, let LendLord do the heavy lifting for you.

Check the metrics such as ROI, net cash flow, and net yield to see how each property is performing.

Next, bearing in mind that there have been significant changes in tenant priorities due to Covid19, review whether the property is still relevant to the current market demands.

1.  Location

Many tenants are now looking in the suburbs rather than city centres, or are looking a bit further afield due to the continuation of “working from home”, even though restrictions have now ended.

Not having to commute as much means that people now have more freedom of choice when it comes to where they live, and they are able to explore areas that are further out but offer them more for their money.  Prior to lockdowns, the average commute was 23 miles, but this has now risen to 56 miles.

Local green spaces are also popular and access to the countryside is of growing importance.

With more tenants working from home, local amenities have become increasingly important such as gym, leisure facilities, supermarkets, internet cafes, pubs, restaurants etc.

2.  Property

Tenants are looking for properties with flexible space, and properties with a room or space to use as a home office are in high demand.

Tenants are also looking for outside space, so a garden is a must for a family home, and flats with balconies or communal gardens are more popular than those that do not have these amenities. Three in five (60%) renters would be willing to pay more for a flat with a terrace or balcony after the lockdown period.

In January 2021, Zoopla found that having a garden tops the list as one of the most desirable features to have in a rental home, a trend that’s risen in both the rental and buying market with a recent study revealing the price of homes with gardens has hit a four-year high.

Parking and a garage rank as the second and third most-searched-for features, with some people perhaps planning on turning a garage into an at-home gym, with equipment sales spiking a massive, 5813% in the first UK lockdown.

Alongside a garden, another high-ranking feature for rental properties is a balcony. This feature is the most-searched-for in areas where gardens are hard to come by, specifically in London. Areas searching for this feature the most within the capital include the City of London, Westminster and Tower of Hamlets, as well as being one of the top terms in Southwark, Islington and Hackney.

3.  Energy efficiency

With rising energy prices, tenants are now more aware of the cost of running a property and are seeking energy-efficient homes.

People who regularly work from home use the heating far more to maintain a comfortable working environment. So an increase in the number of homeworkers could see a wider preoccupation with thermal comfort and the energy efficiency of their homes.

There is also the issue that, come 2025, it may be illegal to let a property with an EPC energy rating of less than C, and this means that all landlords should be reviewing their properties to see what energy rating they are.  If below C, landlords may have to invest up to £10K to bring properties up to a lettable standard.

4.  Natural light

A growing preoccupation with exercise and health could also see more people thinking about the impact internal environments can have on our well-being, prioritising natural light which tenants will become more aware of the importance of when spending more time in their homes.

Summary

If you do not have a property that is performing, does not have the above attributes, or is simply the weakest in your portfolio, now might be a good time to sell it and invest in properties suited to the post-Covid era.

It’s important to consider long-term performance, as well as short term performance, and also to consider past performance in terms of voids and tenant change-over.

Many landlords find that certain properties seem to attract more voids, more rent arrears, and generally more hassle, and those properties need to be looked at carefully to see if they are really worth keeping, or if the money could be invested in a different property that is going to perform better.

You can use the Lendlord data to make wise investment decisions that will ensure your portfolio remains robust and able to survive any market shocks that may occur as the economy tries to recover from the Covid19 pandemic.

It makes sense to eliminate weakness, and then reinvest in more strongly performing assets, or even consider a different strategy, such as a holiday let, as these are performing very strongly and can deliver some really exciting cash flow.

The bottom line is simply this:  Don’t let a poorly performing property drag down your entire property business!

Use the Lendlord software for detailed analysis and live a more profitable and less stressful landlord life.

In addition to web-based desktop dashboard, Lendlord can be accessed using iOS or Android mobile apps.

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