7 Tips About Current Property Market Trends in the UK from Simon Zutshi
Last updated: 26 Dec 2023
In the captivating Episode 10 of Deal Finder's Corner we were delighted to host Simon Zushi as our special guest. Simon is an experienced investor, successful entrepreneur and best-selling author recognised worldwide as one of the TOP WEALTH CREATION STRATEGISTS. He was sharing with the Property Filter community members his tips about how to thrive in the current market situation, which strategies work right now and what are the opportunities awaiting property investors and deal sourcing agents in 2023.
Housing shortage
The fundamental trend that demands attention in 2023 is the ongoing housing shortage in the UK. The country is facing a significant accommodation deficit due to the increasing population and growing demand for homes. According to data from the UK government, there is a need for approx. 300,000 new homes every year to keep up with the housing demand. However, the current rate of construction falls short of meeting this demand. On average, the UK is building around 150,000 to 200,000 homes annually, leaving a substantial gap between supply and demand. Property investors and developers must be aware of the significant demand for housing and the potential opportunities to address this shortage.
Observe the masses and do the opposite
In 2023, the current property market is facing significant challenges due to high-interest rates and economic uncertainties. The situation bears some resemblance to the aftermath of the credit crunch that occurred in 2008 and 2009 when many investors stopped their activities due to market stagnation. While the situation is complex, it also presents opportunities for investors who can navigate the market strategically and adapt to the changing economic conditions using knowledge gained from professional property training courses and by using the newest technological tools like Property Filter.
TIP 1: Single Lets Just Do Not Work
Single-let properties often fail to generate sufficient rental income to cover mortgage costs. As a result, many landlords are considering alternative investment strategies or even selling their single-let properties altogether. This shift in the market is prompting investors to explore new avenues, such as HMOs, serviced accommodations, or other creative approaches to maximise returns and mitigate risks.
TIP 2: Cash Buyers
Aspiring buyers should keep an eye out for attractive cash discounts, typically around 10% of the sellers need cash ASAP.
TIP 3: HMOs Not Only For Students
For new investors venturing into HMOs, it's essential to understand that this strategy is not limited to renting to the students only. Exploring various tenant options, such as young professionals, working individuals, and charities, can open up new avenues for profitable HMO investments.
TIP 4: Impact of Section 24
Section 24 has had a significant impact on the property market, with only a small percentage of landlords opting to incorporate, as indicated by Property 118 figures showing approximately 8-10% have chosen this route. This change in the tax landscape has led many landlords to reassess their strategies and look for decreasing their portfolios.
TIP 5: PLO - The Most Powerful Tool
PLO is not just a strategy, but a powerful tool that is often overlooked and underrepresented in the property market. Many sellers may not need immediate cash but want to get rid of the property, making them open to PLO deals. For example, retiring landlords or those who have inherited properties might not be in a rush to sell and can be flexible about the terms. There are also some unique circumstances where (most often) landladies, who inherit properties after the passing of their fathers or husbands, may be open to PLO deals to avoid the hassle of property management. Rather than negotiating the price down, investors can offer to meet the seller's desired price if they agree to their terms. This can be an advantageous approach, especially when the market is recovering, as it allows for potential “discounted price” in the future. Moreover, transforming a single let into a HMO or SA can be explored as viable options to increase property value and cash flow.
TIP 6: High-End Co-living
High-end coliving HMOs are experiencing a surge in demand. As the housing landscape evolves, there is an increasing preference among tenants for luxury shared living spaces that offer not just accommodation but also a sense of community and modern amenities. Investors who tap into this trend can capitalise on the growing demand for high-quality coliving experiences, generating attractive returns and establishing a sought-after niche in the market.
TIP 7: The Future of SA
SA is set to face governmental regulations in the near future, presenting a unique opportunity for professional operators to thrive while eliminating part-time competitors from the market. By adhering to new regulations and providing a top-notch, compliant service, seasoned SA professionals can build trust with guests and investors alike, creating a sustainable business model with higher profitability and a competitive edge in the evolving accommodation landscape.
If you feel Simon’s tips and prognosis about current property market trends were valuable to you, check Episode 10 of DFC here and see how Simon was guiding Ewen and Sarah on their search for PLOs deals in Lester.
