You may have noticed any number of the reports last week prophesising a tricky future for some parts of the property market, particularly to retail landlords. Investment Property Databank released figures stating that growth in value of offices, shops and warehouses is down 0.2% and the future for residential property seems uncertain.
Weathering the storm is what it’s all about as a landlord; you can’t avoid bad markets but you can be prepared for them. What do you need to know and what do you need to be thinking about for the future?
Growth and Decline
Remember that many reports use the phrase ‘reduction in growth’. The operative word here is not reduction, it’s growth – in many cases markets are still going upwards, they are just growing by less than previous quarters. All of this is relative and while the economy is stagnating, growth figures elsewhere will be low.
Stable rent payments are the priority for many at the moment, and even if you’re making a small loss it’s probably better than receiving no rent at all. Rent Guarantee Insurance can really help cover the times when your tenants don’t pay, but be creative; maybe it’s time to sign a new contract that will see you through until the end of 2012? This will make sure you’re rental income is stable until at least then.
Value and Selling
Your priority should be making the most from your property and you need to make sure that you look to sell if it’s the right time. Terms like the ‘bottom of the market’ are very unhelpful, it probably means that there could be a gain in the future, but if you invested ten years ago then it’s likely you’ve made your profit back anyway. If you’re struggling to find tenants, the best bet might be to get out rather than keep hoarding losses.
The future looks uncertain for the property market and good preparation is key. Whether you need to take out a new contract with your tenants, change agents or get a valuation on your property, the time to do it might just be now.