Investors in buy to let in the UK are losing thousands of pounds in income - and it’s their own fault for not improving their management systems, claims a property management firm.
That’s because they’re sitting on old mortgages and loans, unchecked insurance, and inefficient financial management practices which threaten the future viability of their investments.
DJ Alexander Ltd says the latest figures from UK Finance highlight a significant softening in the buy to let market, emphasising the need for investors to be as fleet of foot as possible in how they manage their business.
In addition, tax and regulation changes may be increasing investors’ outgoings.
“These changes have increased the costs of buying BTL properties; increased the costs of borrowing; reduced the levels of borrowing available; and reduced the tax relief on the operation of a BTL property. The result is that yields have been falling across the UK as landlords’ struggle to cover these losses” claims Alan Kent, head of DJ Alexander’s financial services division.
“In 2017 only one region in the UK recorded higher yields to investors and that was Yorkshire and Humber. The rest reported static or even falling yields. The result is that many BTL landlords may start to lose money in the next year or so without fully appreciating what is happening” he adds.
Kent says investors “need to look at the way their properties are financed; the way they are insured; and the financial controls they apply to the operation of their business. There are ways to reduce costs at every stage and at every level of business, but they don’t magically occur, and owners must examine all financial aspects of their investments to ensure they are maximising their income.”