Week 24: Buy To Lets

We are halfway through June now and hope everyone is having a great start to the summer. I'm thinking BBQ’s, ice teas and floral hanging baskets. I recently decided to change things up in my business plan and mentioned last week that the focus was going to be deal sourcing for now. I am also considering traditional Buy-to-lets. I know this seems a little dated and not half as fun as some of the other fancier strategies but old is gold and there will always be a market for families looking for your 3 bed semi with a south facing garden in great locations. You know the ones with bay windows and a nice little porch. As you are aware with the introduction of Article 4 (a new legislation) which came into effect last week on the 8th June and the whole of Birmingham is now an article 4 area. What does this mean? Well you can't do any new houses of multiple occupations (HMO) in this city, so this is a nice big fat spanner in your plans. We were as a business hoping to secure a couple of these (HMOs) but had never anticipated the Covid-19 pandemic which turned an already bad situation into something I can't even describe. But, anyway moving forward is it such a bad thing to look into BTL’s? 

I mean so many people have lost their jobs recently and with large corporations going into administration everyday this figure is only going to rise. ‘Generation Renters’ is on the up. This is a term used for people who can no longer get onto the property ladder as there is no nice way of saying this: ‘we are actually the poorest generation’ much poorer than our parents and their parents. Just a few short decades ago couples were buying their first homes in their early 20’s (I believe 23 was the number). These days it is not uncommon for an adult staying with their families well into their 30’s. This gave rise to the HMO boom where you kinda had a feel for moving out and owning your own home but the transition from HMO tenant to homeowner has been shrinking rapidly. You can thank this to inflation and stagnant wages with a few recessions thrown in. But the truth of the matter is we are in a deep hole and the climb is just getting harder and harder. For this reason BTLs will always remain popular as there is such a strong demand for it. You also get some people who don't want to be a homeowner as they like the flexibility of what renting allows. You do know the whole fascination of owning your own home is a UK thing and many nationals in mainland Europe are happy with renting. 

Take a look at another local/regional factor: HS2. The advent of this will cut commuter time from Birmingham to London (vise-versa) in just an hour. So a lot of families can now migrate to leafy suburbs of the midlands without having to trade their London jobs. This allows them to keep their high (London based) salaries combined with the lower cost of living in the second city. Thereby, instantly improving one's living standards. These families will need to be housed, perhaps looking to rent for a short term then buying their own property eventually. All those Flip projects; buy, refurbish, refinance, rent or sell (BRRR). So you see single-lets is not such a bad thing if you buy properties at a good price in great areas, rent in the interim and wait for capital appreciation as house prices with or without recession do tend to rise based on average figures. So it will always be a good deal. Not necessarily a get rich quick scheme but a ‘steady’ rich scheme. Property is vast, you can always tweak it up and try another. I'm sure the current situation will give way to some very interesting opportunities. I will keep you posted as and when. Till next time have a fab week fellow propertiers (it's not a word by the way....hehehe).