Contrasts are often found in the property market, and they can provide an important lesson for investors. This year is already shaping up to be one filled with yet more dire headlines, but borrowers must not completely give up on the idea that there is a way forward for them.
The rental market offers a good example right now.
Rents in England dropped for the fifth consecutive month in December, according to Goodlord.
Dropping by 1.7% month-on-month, the average rent for new tenancies sat at £1,185 by the end of 2024.
Yet, rental yields themselves are climbing.
The total average yield for England and Wales hit 7.4% in Q4, according to analysis from Fleet Mortgages. This was up 0.6% on the year, and 0.2% on the previous quarter.
In fact, rental yields remain almost “universally positive” with only the West Midlands showing a yearly fall.
So, some landlords may be struggling with new tenancies, but the yields they’re generating could be surprisingly healthy.
Also, understandably, it seems there isn’t much confidence or appetite among BTL investors in the current market.
The latest data from Twenty7tec revealed BTL mortgage searches were down 35% between November and December 2024.
But while there may not be much demand from landlords at the moment, there is still a clear need for rental options in the market.
Towards the final months of last year, Zoopla found that there were 21 people competing for every rental property in the UK. The imbalance between supply and demand in the market is set to continue in 2025 too.
Renters are desperate for more options. Hesitancy from overly pessimistic property investors threatens to hold them back from success.
This isn’t to say we should all be flippant or naive about the challenges that are out there in the market. It may be tough to progress for many at the moment, and uncertainty looms this year.
The news may be bleak, but it’s important to keep an eye on what’s going on in the property world and keep up with the changing economic picture.
Still, we need to remember that a property investor’s success is very much dependant on their individual circumstances – as opposed to what’s typically happening with their contemporaries.
Just because one landlord is struggling to find tenants, it doesn’t mean everyone will face the same issue.
One fix-and-flip investor may not find a buyer as quickly as they’d like. But another may secure a sale within days.
This is why it’s so important to embrace tailoring and bespoke solutions in the property market. If we brush the entire market with a pessimistic brush, few will benefit from the opportunities that are out there.
The specialist lending market’s entire ethos is built around this. We understand that by evaluating an investment’s potential via the borrower’s specific circumstances, we’re more likely to find a way forward.
As we push through the coming 12 months, property investors deserve a solution for their situation, and their situation alone. Whether that involves unique interest payment plans, top slicing to boost affordability, or truly flexible underwriting options.
