The end of 2022 is fast approaching and there are many questions facing the property sector as we look ahead to next year. What’s going to happen to house prices? Is now a good time to invest in property? Is the age of buy-to-let really over, and if so, what are the best opportunities to investigate in the months ahead?
While there’s a lot of doom and gloom out there, we’d stress that there are always opportunities to capitalise on the market and make money from high performing asset classes, no matter what’s happening in the economy. Read on as we look back at the year that was and look ahead to property investment in 2023.
Opportunities Amidst the Uncertainty
It’s probably fair to say that 2022 has been a bit of a rollercoaster ride for the economy, with the UK facing a cost of living crisis not seen for decades.
For landlords, increasing legislation and soaring interest rates have massively squeezed buy-to-let profits. Then there was the mortgage chaos caused by the Truss government’s disastrous mini-budget, before Sunak and Hunt stepped into power to reverse the majority of the plans and stabilise markets.
Despite this, the UK property market held up exceptionally well and exceeded many expectations, with record house prices and a very strong demand for rental properties that shows no sign of slowing down.
But what about the future? What’s ahead for property investment in 2023?
While there’s no denying that the economic situation is going to be tough over the next twelve to eighteen months, challenging times and market downturns often bring new opportunities for savvy investors who utilise the right strategies. It’s just that you need to consider the best opportunities in the current climate and not necessarily the ones most people have been used to.
What About Buy-to-Let?
Traditional buy-to-let has really struggled over the last twelve months as the cost of borrowing has soared and squeezed landlord profits, in some cases to the point of a loss making situation.
One of the biggest threats to landlords is the increasing legislation and taxation. The Government’s rental reforms, due to be made law in 2023 in the Renters Reform Bill, includes sweeping changes that are going to have a major impact on the sector. Reforms such as the scrapping of Section 21 evictions, a legally binding Decent Homes Standard and other major reforms, are all putting pressure on landlords amidst a backdrop of rising costs and increased taxation.
For some landlords, the increased burden and cost of upgrading properties to meet the new standards, including more stringent EPC ratings, will be enough to make buy-to-let unprofitable and make them want to sell. It also doesn’t help that maintenance costs are soaring as inflation reaches record levels.
There Are Still Opportunities Out There
All this doesn’t mean that there aren’t ways to make money from property – far from it.
In any downturn, it does however become even more important to do your research and seek out the opportunities that are right for the current climate and also suit your individual circumstances. It’s critical to choose high performing asset classes in the right locations to deliver strong yields and the best possible returns.
There are also investment opportunities that circumvent many of the challenges facing landlords and property owners. For example, you don’t need to actually own a property to make money from the market, so it could be worth looking into opportunities where it’s possible to invest without a mortgage and where maintenance is managed within the contract, thereby eliminating many worries over soaring costs and legislation.
Of course, one thing to also keep in mind is that while the immediate future may be uncertain, property has always traditionally been one of the most stable long-term investment options and a relatively safe bet when compared to many alternatives.
Ultimately, there are many opportunities to profit from property right now – but those opportunities definitely aren’t the same as they were a few years or even a few months ago. The key is seeking out the right property assets and sectors, amongst other things. Be sure to weigh up different opportunities and carefully think about your own individual circumstances and investment goals.
Important note: The information provided in this article is general in nature and does not constitute personal financial advice. If you are unsure whether an investment is right for you, please seek professional advice. If you choose to invest, the value of your investment can both rise and fall so you may get back less than you put in.