Distressed Property UK - An Opportunity in 2023
There has not been such an excellent opportunity in UK property investment since the Credit Crunch and Financial Crisis of 2008. We presently have several key factors coming together:
Rising Interest Rates
Rising base rates impact the cost of borrowing money. The majority of buy-to-let investors in the UK purchase properties using a mortgage. Many of these products are more expensive, and those remortgaging after fixed-term rates find it particularly difficult. This has an impact on demand, which then leads to weak or falling property prices.
Overleveraged Buy to Let Investors
We are seeing more and more buy to let investors selling quickly and cheaply to exit the market as debt payments become greater than income (rent), even after a boom in rental prices. Buy-to-let property investors were banking on low-interest rates 'forever' and have not undertaken any due diligence through sensitivity analysis or stress-testing their portfolios. The negative monthly cash flow is crippling many individual investors, even some larger companies, who are selling stock at distressed prices.
Government policies are harming the private rental sector through various measures such as the abolition of Section 21 evictions, EPC upgrades to C, the introduction of heat pumps, etc. This has knocked sentiment in the short term, but as the government waters down proposals, its impact will be less, but the damage has already fed itself through to the market.
Fear and greed drive asset markets, and property is no different. To paraphrase Warren Buffett, be fearful when others are greedy and greedy when they're fearful. Property investors who bought at peak pessimism in 2008, 2009 etc are sitting on excellent profits in 2023.
For the past 12 months or so, at Distressed Assets, we have seen a distinct increase in the number and quality of opportunities available to the astute but to let property investor in the UK. There are examples in the No.1 bestselling book, Property Auctions: Repossessions, Bankruptcies and Bargain Properties (2023) also a few here, from the many we find through property auctions or off-market.
Distressed Property UK
Contact us today to see how we can help you build a portfolio of undervalued properties with a strong cash flow.