Different Ways to Expand Your Rental Portfolio

As a private landlord, you play a crucial role in meeting the housing needs of an increasing number of tenants across the UK. Whether you became a landlord by holding onto a former home or through deliberate property investment, your contribution to the housing market is invaluable. If you currently rent out one property and are considering expanding your portfolio, this guide will help you explore the best strategies and property types to consider, along with market challenges to anticipate. 

Understanding the Evolving Rental Market

The UK rental market is constantly changing, with a rise in both new landlords and experienced property investors. With growing demand for rental properties, it’s essential to evaluate your investment options carefully. Here are some important factors to consider: 

Advantages of Investing in Family Homes

Why Choose Family Homes? 

Family homes represent a solid investment opportunity. Research from 2018 indicated that 40% of millennials were renting by age 30, double the rate of Generation X. As millennials grow older, their need for rental homes suitable for families will increase, particularly in areas with excellent schools and transport links. 

Key Benefits 

• Strong Demand: Family homes in desirable areas are typically rented quickly. 

• Stable Tenancies: Families tend to stay longer, especially if located near good schools and facilities. 

• Property Care: Families are more likely to maintain the property well to ensure a stable living environment. 

 The Appeal of Student Properties

 Why Consider Student Accommodation? 

Cities with growing student populations offer a steady demand for rental properties. While managing student rentals involves specific licensing requirements, they can be highly profitable. 

 Key Benefits 

• Minimised Vacancy: Students usually secure housing well before the academic year starts, reducing vacancy periods. 

• Rent Guarantees: Many student rents are guaranteed by parents, lowering the risk of non-payment. 

• Consistent Demand: The ongoing influx of students ensures a continuous demand, particularly for properties near universities. 

Investing in New Build Properties

Why Choose New Builds? 

New build properties come with several advantages for landlords. Following the 2007-2009 recession, housebuilding has increased, providing more investment opportunities. 

Key Benefits 

• No Chain Hassles: New builds typically do not involve the complications of a property chain. 

• Move-In Ready: These properties are often freshly decorated and need no initial refurbishments. 

• Energy Efficient: New builds usually exceed older homes in energy efficiency, reducing utility costs for tenants. 

• Developer Incentives: Developers may offer discounts to investors, lowering upfront costs. 

Considering Houses of Multiple Occupation (HMOs)

What is an HMO? 

An HMO is a property rented out by at least three people who are not from one household but share facilities like the kitchen and bathroom. 

Key Benefits 

• High Rental Yields: HMOs often yield impressive returns, sometimes reaching 10%. 

• Stable Income: HMOs targeted at students or young professionals can provide reliable rental income. 

Considerations 

• Frequent Tenant Turnover: Expect higher tenant turnover rates. 

• Complex Deposit Handling: Shared spaces can complicate deposit returns. 

• Licensing and Compliance: HMOs require local council licensing, involving fees and inspections. 

Exploring Other Investment Options 

Ex-Local Authority Properties 

Ex-local authority properties can be a cost-effective investment. These properties generally cost less to purchase but still command good rental rates, providing better yields compared to privately built homes. 

Studio Flats 

Studio flats, especially in urban areas, are consistently in demand. They offer high rental values and a straightforward letting process, making them a valuable addition to your portfolio. 

Conclusion 

Expanding your rental portfolio is a strategic endeavour that demands thorough planning and consideration. Whether you opt for family homes, student properties, new builds, HMOs, ex-local authority properties, or studio flats, understanding the unique advantages and challenges of each will enable you to make informed investment decisions. By staying informed and strategic, you can successfully grow your rental portfolio and meet the rising demand for rental properties in the UK. 

To find out how our experts can help you get in touch by emailing admin@fortyeightestates.co.uk or calling 01908751488.