Property entrepreneur urges landlords to seek regional investment opportunities
Mike Robson, co-founder of Avocado Property, encourages landlords to explore investment options beyond traditional markets, highlighting coastal and North East areas as potential opportunities amid current market challenges.
Property entrepreneur Mike Robson has called on buy-to-let landlords to be bold in expanding their portfolios despite prevailing headwinds such as increased borrowing costs and regulatory pressures. Speaking on the relaunch of the Investors Corner podcast, Robson emphasised that while many investors are holding back, there remain viable opportunities for those willing to look beyond the usual locations.
Robson pointed to significant regional disparities in housing market conditions, contrasting the relatively robust Home Counties market with weaker demand in some coastal areas. He illustrated this with his recent purchase of a flat in Devon, acquired for approximately £130,000 less than the previous owner paid five years ago, further negotiating a 9% discount on the asking price. This example underscores the potential for landlords to secure properties at reduced prices in markets where buyer demand has softened.
Regional market variations and investment considerations
Robson highlighted that while the Home Counties exhibit strong sales activity, with over half of properties sold subject to contract compared to available stock, some coastal regions report much lower figures, between 14% and 30%. He attributed part of this to the aftermath of the 2021 buying boom, where fixed-rate mortgages agreed at lower interest rates are now expiring, creating pressure on property owners in these areas.
Additionally, Robson identified parts of the North East as offering affordable property prices, presenting opportunities for investors seeking value. However, he cautioned against simply chasing the cheapest properties or highest yields, especially when investing far from one’s base. Instead, he advised landlords to assess property condition, location, and management practicalities carefully.
Robson also recommended that landlords reassess their buy-to-let strategies in light of higher borrowing costs and changes to mortgage interest tax relief. He encouraged investors to clarify their objectives, consider ownership structures, and develop long-term financial plans to ensure sustainable investment decisions.
Implications for landlords and agents in the current market
For landlords managing small portfolios, Robson’s advice suggests a strategic shift towards more thorough market research and due diligence. Rather than following trends or investing in familiar areas, landlords may benefit from exploring less popular locations where prices have softened but potential for long-term growth exists.
This approach requires a more hands-on management style, particularly if properties are located at a distance. Landlords and letting agents should consider the logistics of property maintenance, tenant management, and compliance with local regulations, which can vary significantly across regions.
Moreover, the evolving financial landscape means landlords need to be vigilant about mortgage terms and tax implications. Understanding the impact of fixed-rate mortgage expiries and the reduction in mortgage interest tax relief is crucial to maintaining profitability and avoiding financial strain.
Challenges and uncertainties in regional investment
While Robson’s insights highlight opportunities, uncertainties remain. The exact timing of market bottoms is unpredictable, and regional economic factors could affect property values and rental demand. Coastal areas, for example, may face ongoing challenges related to economic shifts and demographic changes.
Additionally, regulatory changes continue to shape the private rented sector, with landlords needing to stay informed about evolving safety standards, licensing requirements, and tenancy laws that may differ by locality. The practicalities of managing multiple properties across diverse regions could increase administrative burdens and compliance risks.
Landlords should also be aware that investing in lower-demand areas might entail longer void periods or more tenant turnover, impacting rental income stability. Careful tenant screening and proactive property management will be essential to mitigate these risks.
Practical steps landlords should consider now
Landlords contemplating portfolio expansion should begin by conducting detailed market analysis beyond their immediate area. This includes reviewing local property prices, rental yields, and demand indicators, as well as understanding regional economic drivers.
Engaging with local letting agents and property managers can provide valuable insights into market conditions and tenant expectations. Landlords should also assess the condition of potential properties thoroughly to avoid unexpected repair costs and ensure compliance with safety regulations.
Financial planning is critical. Landlords should review their mortgage arrangements, considering the implications of upcoming fixed-rate expiries and the impact of tax changes on cash flow. Consulting with financial advisors or mortgage brokers specialising in buy-to-let can help in structuring sustainable investment plans.
Finally, landlords must keep abreast of regulatory developments affecting the private rented sector, including any local licensing schemes or changes to tenancy legislation. Maintaining comprehensive records and documentation will support compliance and protect against potential disputes.
Supporting landlords through market shifts with TLA
The Landlord Association (TLA) offers resources and tools to help landlords navigate the complexities of expanding portfolios in varied regional markets. Membership provides access to practical compliance guides, property management advice, and up-to-date regulatory information tailored to the private rented sector.
TLA’s new property management and compliance platform, ORBIT, currently in BETA testing, is designed to assist landlords and letting agents in organising property records, managing rental documents, and tracking key actions such as repairs and inspections. While still in development, ORBIT aims to centralise compliance information, helping landlords stay prepared for regulatory changes and maintain evidence of their management activities.
By exploring TLA membership and ORBIT BETA access, landlords can enhance their ability to manage diverse portfolios effectively, ensuring they meet legal obligations and optimise investment outcomes in challenging market conditions.
Looking ahead, landlords willing to adopt a measured and informed approach to regional investment may find opportunities to grow their portfolios sustainably, despite broader market uncertainties.
Sources: Landlord Today
TLA - The Landlord Association