During the downturn many landlords suffered significant losses caused mainly by a drop in property prices as well as through exposure to rent arrears as tenants struggled to pay the rent.
Since then the sector has witnessed a recovery and with tenant demand now exceeding supply and interest rates at a record low level, landlords are well positioned to capitalise on current market conditions by expanding their property portfolios.
However, reflecting on the issues faced by landlords over the past couple of years, Graham Kinnear, MD at Landlord Assist, says that despite the favourable conditions many landlords are continuing to tread carefully and won’t be rushed into buying further properties.
He says this is simply down to the lessons which landlords learned during the recession rather than a lack of confidence in the sector.
“Prior to the credit crunch lots of people bought in to the idea of ever increasing property values and many landlords expanded their property portfolios quickly with the assistance of excessive bank lending.
"However during the height of the recession many were exposed to price falls on their property, in some cases wiping out any equity they had. Thankfully the level of tenant demand has remained strong and the reduction in interest rates has meant that landlords have, by and large, been able to continue.
“Although conditions have since improved it is evident that landlords learned a lot from the recession and the mistakes of other, and are now taking a more cautious approach to the expansion of their property holdings. Unfortunately this combined with a lack of buy to let mortgages has meant that there remains a shortage of affordable accommodation.”
Mr Kinnear says landlords have also become more risk-aware and are taking more precautionary measures to protect their interests.
“Rent arrears have caused landlords endless headaches. Landlords have realised that time rarely heals and have been much quicker contacting eviction firms, such as ourselves, to deal with problem tenants rather than sitting tight and hoping that a bad situation will resolve itself. Landlords are also taking referencing more seriously and are now eager to vet prospective tenants prior to letting them move in.”
