What do property investors and landlords need to know about the rest of the 2022/23 tax year and how can they get smarter with property investment? This blog aims to answer those questions and more.

UK property values at an all-time high

Let’s start with the good news, property value has been growing this year as underlined by the House Price Index released in July showing a YoY increase of 15.5% and the demand for property continues to fuel further house price growth. We expect to continue seeing similar figures throughout the rest of the year.

Economic outlook uncertain

The increase in property values isn’t the only thing that has increased, unfortunately. With inflation in double digits, the cost-of-living crisis and interest rates already rising sharply it is assumed that more and more tenants may not be able to meet their rent commitments. This is further proven by the fact that Barclays Commercial are currently quoting 2 year Fixed Rate Cost of Funds of 5.75% above from 0.28% in the 1st week of 2021 which is almost a 5.5% increase.

This will have a knock-on effect when landlords potentially fall behind on mortgage payments.

As a result, a lot of landlords are looking to re-finance their properties with many looking at fixed rate options for a bit of stability in a volatile market.

Rise in interest rates affecting affordability at higher loan to value( LTV)

As rates rise, lenders debt service cover calculations get tighter, meaning higher interest rates can the lower the maximum loan amount offered. Which unfortunately could mean that in some cases, refinancing isn’t possible with highly geared properties at 70/75% LTV.

Slower lender turnaround for mortgages

Lenders are taking considerably longer to approve an application than they used to, this is mainly due to the current financial situation which has led to lenders becoming more cautious and prudent. This is also in part, due to existing borrowers seeking new products and fixed rates prior to any further rate increase. Lenders want to be certain that the client can afford the payments which means more time spent on due diligence. Our brokers have found that some cases that previously took 4-6 weeks, are now taking up to 12 weeks.

New opportunities for property investors

With interest rates rising and the housing market slowing down, landlords may look to sell off their poorer performing assets within their portfolio. This creates new opportunities for those who want to buy new properties and get into the housing market.

EPC improvements required by 2025 means more landlords investing in their property’s energy efficiency

Despite this deadline being three years away, property experts are advising landlords to act now due to the lack of skilled labour in the market, the increasing cost of materials and the increasing cost of borrowing.

Some lenders are incentivising landlords to make these refurbishments now by discounting borrowing rates for properties rated EPC C or above.

The current lack of skilled labour highly suggests that it’s wise to get ahead of the curve and not to hold off until it’s too late!

About Newable Finance

At Newable Finance, we are on a mission to help landlords, investors and developers get the best financial advice and service.

Find out how we can help you here.