Buy-to-let property can be an effective way for you to store your wealth as a professional rugby player.
As data from the Office for National Statistics shows, the average UK house price has increased from £176,352 in November 2013 to £285,000 in November 2023 when data was last available. That represents a 61% increase in just 10 years.
As a result, you might be considering starting a portfolio this year, or expanding one you already hold. But before you do, it is important to carefully consider key information to ensure you are making the right decision for you.
So, read on to discover five points to consider about buy-to-let (BTL) investments if you are thinking about investing this year.
1. It is difficult to predict how the market might move this year
When looking to invest in property, your first question might be: “What is going to happen to house prices in the coming year?”
Property professionals have already started to produce forecasts as to what they think might happen in the next 12 months, with many estate agents and similar bodies predicting a fall in values. For example, Rightmove predicts that the average new sell asking price will be 1% lower nationally by the end of 2024. Similarly, Zoopla says that house prices are expected to fall 2% over 2024.
Softening prices could be welcome news, as it may mean you can pick up property at a lower cost than you might have expected.
However, unless you have a time machine, it is impossible to predict exactly what will happen to prices this year.
So, take any predictions with a pinch of salt. It may be wise to avoid making decisions based on forecasts, instead doing so with the concrete information you have to hand, such as how much you have available to invest and what you want to achieve.
Furthermore, it is important to keep in mind that investments are typically made with a longer time frame in mind, typically a minimum of five years.
As such, it may not bother you what will happen to property prices this year alone. Keeping a long-term outlook may mean that you are satisfied with what could happen in 2024.
2. Increasing mortgage costs could make property investments more expensive
It is important to bear in mind that mortgage costs may be higher in 2024, as interest rates rose in 2023.
In turn, this could make purchasing property more difficult for you. You may need to factor in higher mortgage costs, and judge whether it is still affordable to invest when you will likely be making larger payments with more interest attached.
Of course, if you are buying without a mortgage, then this will not be a concern. But, if you intend to borrow money to make your purchases, you may want to factor in that this could be more expensive than it might have been over the past couple of years.
3. Greater rental demand could make this an attractive time to buy
One risk that may concern you with BTL property is making your purchase and then finding that you cannot fill it with a tenant. This can be worrying, especially if you buy property with a mortgage and then do not have incoming rent to make your repayments.
That said, with the market the way it is currently, there could be a greater demand than usual for rented properties.
While it does not mean there is no risk of this happening at all, this notion may partially assuage any fears you might have that you will buy property and then be unable to find tenants to fill it.
If you are worried about this, it may be worth looking at subcontracting out the management of your properties to another company. Find out more in the point below.
4. You need to decide whether you will subcontract out the management of your properties
When you have a BTL portfolio, there are some key responsibilities involved. For example, this could include:
- Finding tenants
- Collecting rent
- Solving house repairs or other issues if any arise
- Ensuring that the property meets safety and energy regulations
- Paying the necessary taxes.
You can carry out these tasks yourself. However, they can be complex, and it is important to get it right. If you are trying to focus on a rugby career, it may be a distraction if you are trying to do this at the same time.
So, you may prefer to subcontract these out to a company that can complete them on your behalf. There will be a cost associated with this, which could ultimately reduce the profit you were hoping to generate.
Even so, you may prefer this, rather than trying to balance your rugby career with the responsibilities of managing your properties.
5. Know what you are investing for to help you make informed decisions
Perhaps most importantly of all, it is crucial to know what you are investing in BTL property for.
For example, if you are at the start of your playing career, you might have little need to generate an income from your portfolio. All this might serve to do is increase your overall taxable income, and in turn, increase your tax bill.
As a result, it may suit you better to invest in property with greater growth potential, rather than focusing on rental yields. Then, upon reaching a stage when you want to cash in on your investment, such as at the end of your playing career, you could benefit from an increase in value.
Of course, this assumes that your property investment has increased in value. While this has historically been the case for property, there is no guarantee, and you may get back less than you invest.
Meanwhile, if you are approaching the end of your playing career or have already retired from rugby, you may now want an income to supplement your earnings from your second career.
In that case, you may want to look at properties with higher rental yields, regardless of their potential for growth in the long term.
Whatever you need from your property portfolio, it can be sensible to consider this first before you invest. That way, you can make informed decisions that are in line with your wider financial circumstances.
Get in touch
If you need support managing your wealth as a professional rugby player, then we can help at DBL Asset Management.
Email enquiries@dbl-am.com or call 01625 529 499 to speak to us today.
Please note
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.
Buy-to-let (pure) and commercial mortgages are not regulated by the FCA.
Think carefully before securing other debts against your home.
