Written by: Danny Belton - Head of Lending
Buy-to-let properties have always been a popular choice for those looking to make long-term financial investments. However, as market conditions fluctuate and economic landscapes evolve, you may find yourself wondering whether it's time for a property portfolio review.
It’s good practice to make sure you carry out a review of your buy-to-let property investments at least once a year, checking how they’re performing and whether your capital is still in the best place, working as you want and need it to.
Here are five key areas you should be looking at when reviewing your property portfolio:
1. Do your LTVs stack up?
Although the majority of landlords have overall LTVs of below 60%1, the impact of higher mortgage rates means that those who bought fairly recently and are coming to the end of their current fixed-term deal will have more to think about.
Whether you’re planning to remortgage to pull out some capital, or your mortgage term is coming to an end and you’re looking for your next deal, you may find that you struggle to meet your financial goals - unless your property has grown sufficiently in value.
If you haven’t done so already:
1. Check the LTV of each mortgage within your property portfolio
2. Find out how long the remaining mortgage term is
3. Determine the outstanding loan amount.
You should then speak to your local estate agent to secure an idea of how much each property is worth, or secure a formal valuation from a RICS surveyor. Once you’ve conducted valuations and outstanding borrowing figures, you can calculate the current LTV for each property and the portfolio as a whole.
If the total borrowing amount is above a 75% LTV, you’ll have to decide how best to move forward. Our advisers can give you a free review of your mortgage position, offering advice for ensuring your property portfolio is viable moving forward. Simply get in touch to find out more.
2. Do you have the right mortgage products for your property portfolio?
Whether you’re a portfolio landlord or only have one property, it’s a good idea to check in with a broker each year to carry out a portfolio review, ensuring that you’re always on the right deals for your circumstances. New products are coming out every day in this highly competitive market, so even if you’re still within an initial ‘lock in’ period, you may find it’s worth paying the redemption charge to secure a more competitive rate in the longer term.
If you’re planning to maintain your property portfolio into your retirement, it’s important that you’re with a lender who will allow you to hold a mortgage beyond 75 years of age. Different lenders have different age limits and criteria to meet, so it’s important to shop around, as there are plenty of options available.
Our expert advisers are on hand to assess your current mortgage options as part of a portfolio review. Even if it turns out that you’re still on a deal you’re happy with, it’s certainly worth having a conversation.
3. Is your property portfolio keeping up with averages?
Even if you’re happy with the returns you’re getting from your property portfolio, you should keep an eye on how much they’re growing in value, and whether your rents are below or on par with the rest of the market. It’s also good practice to compare these with local and national average figures to get a good idea of your overall positioning.
4. Are your property portfolio costs as low as possible?
The costs and expenditure associated with utilities, products, and services you use across your property portfolio are constantly changing, so it’s well worth checking whether there are more favourable mortgage deals available. At the same time, remember that you rarely get the best value for money from the cheapest option, so do balance the spend versus the quality of the product or service.
5. Are you charging the right rent across your property portfolio?
Although you can’t simply raise rents for no reason, regardless of whether your own costs have increased, you may discover you’re able to charge a little more – particularly if you’ve had the same tenant for some time and haven’t yet reviewed the amount they’re paying.
Unless the tenancy agreement states otherwise, you can’t raise the rent without the tenant’s consent within the initial fixed term. After this point, you must give your tenants at least one month’s notice. If the tenancy is periodic, you can’t increase the rent more than once a year, and any increase you propose must be fair and detailed in writing - either with a new tenancy agreement, an official notice proposing the new rent, or any other written agreement signed by both parties.
To check whether you should be able to put the rent up, speak to local letting agents and ask whether you could be getting more rent. Even if you’re letting and managing your properties yourself, most estate agents will be happy to have an honest conversation and give you their professional opinion.
Whether you’re looking to expand your property portfolio, or want to conduct a portfolio review to make sure it’s in check, our expert advisers are here to help. Get in touch with us today, and let us help you get mortgage ready.
References
1 Hamptons, 2023
Important information
There is no guarantee that it will be possible to arrange continuous letting of the property, nor that rental income will be sufficient to meet the cost of the mortgage.
Your property may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.
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