How To Maximise Your ROI

In the dynamic world of real estate, staying ahead of the curve is not just an advantage – it’s a necessity. If you’re looking to maximise your ROI (Return On Investment), keeping a close eye on ever-evolving property market trends in your area is paramount. In recent times, the property landscape has undergone significant changes, impacting both sales and lettings. Let’s delve into the crucial aspects that can influence your ROI and explore strategies to ensure you’re on the winning side.

How Much Has The Property Market Changed?

To comprehend the current state of the property market, it’s essential to examine the recent shifts in key indicators. Across the board, statistics reveal notable changes in both sales and lettings. Generally, house prices have doubled over the last decade, and have increased by between 7% and 9% year on year. Although 2023 may be an exception due to many house price forecasts predicting a slump in prices, it is important to note that any change in your property value can impact your ROI. With the housing market becoming increasingly impenetrable for first time buyers, many are staying in rental accommodation, which is subsequently pushing rents up by an average of 11% year on year – far more than the jump in property sales prices.

The property landscape is not without its challenges. The base rate, mortgage increases, and the rising cost of living have collectively exerted pressure on buy-to-let landlords, elevating their mortgages and operational costs. Take, for instance, the Birmingham property market. A combination of low supply, increasing demand after the success of the Commonwealth Games, and impressive inward investment has seen prices in the second city soar by 70% over the past decade according to the Land Registry House Price Index.

Job opportunities have also played a pivotal role in shaping the local property dynamics in Birmingham over the past few years. The growth of huge businesses such as HSBC, Goldman Sachs and PwC in the city, as well as its status as the most lucrative place for start ups in the UK, have brought more and more people into Birmingham. With such impressive regeneration yet to come, this trend isn’t set to change anytime soon. These shifts make Birmingham property increasingly valuable as buyers and tenants compete for high-quality properties in the second city. This in-turn directly impact your potential ROI as rents across the city increase over time, making it imperative to adapt your strategy in response to such market fluctuations.

Understanding The Local Market

To thrive in the ever-changing property market, understanding local dynamics is crucial. Factors such as regeneration schemes, new transport links, job opportunities, and housing shortages can significantly contribute to the appreciation of your property’s value. With the concept of ‘forever renting’ gaining traction due to the erasure of Help To Buy and rising property prices, the rental market has become intensely competitive. It’s essential to evaluate if your current rent rates reflect this increased demand and competitiveness – if not, you could see your ROI decrease as your portfolio suffers as a result of rising maintenance and mortgage costs.

Market conditions are not static; they’re in a constant state of flux. This underscores the importance of consistent portfolio review and performance analysis. By staying attuned to local trends, you can identify opportunities for portfolio growth and rent increases, and maximise your ROI. Explore the following aspects of your local rental market to understand what impacts your property’s value in both the short and long term:

JOB OPPORTUNITIES: can you anticipate an influx in searching tenants to the area anytime soon as people relocate for their careers?
REGENERATION: regeneration schemes serve as evidence of investment in your community that can catapult local growth
TRANSPORT: now HS2 north has been scrapped, a variety of new transport initiatives have been given the green light – will any of these make your neighbourhood more accessible?
SUPPLY AND DEMAND: are there plans to create more affordable rental units in your area? If not, you can expect your buy-to-let unit to remain as in-demand as ever

Should I Increase My Rent?

The question of whether to increase rent is a common dilemma for landlords. Many choose to adjust rental rates to align with mortgage payments or to reflect changes in the property’s rental value. Failing to do so might hinder the success of your portfolio over time, and drastically hinder your ability to make a return on your investment.

However, the decision to increase rent should be approached strategically. It’s not only about covering costs but also about maximising your ROI. These rent adjustments need to be handled tactfully so as not to alienate your tenants, harm your tenant-landlord relationship, or negate tenancy laws. Engaging with a local property expert can provide valuable insights into the optimal timing and magnitude of rent adjustments. Depending on the tenancy you have running, you may only be able to increase your rent once every twelve months, or at the end of an agreed fixed term. Complying with local regulations is also crucial, and a consultation with your Centrick team can ensure that any rent increases are executed within legal boundaries.

Book a Rent Review with the Centrick team

To navigate the complexities of the property market and maximise your ROI, consider booking a Rent Review with the Centrick team. Our experts are equipped with the knowledge and experience to help you make informed decisions that align with market trends and regulations. Don’t let the evolving property landscape catch you off guard – take proactive steps today to maximise your returns by filling out the form below.