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As UK edges towards recession, property expert urges  BTL landlords ‘to ride it out’

With Britain edging closer to its first recession since the financial crisis, a leading property auctioneer is urging property investors, including buy-to-let landlords, to hold their nerve against the spectre of an economic downturn. 

The country’s dominant service sector, which accounts for about 80% of the economy, unexpectedly plunged into contraction last month, in a sign of the increasing stress facing the economy as Brexit looms.

According to IHS Markit and the Chartered Institute of Procurement and Supply (Cips), activity in the sector fell as companies reported a fall in sales, job losses, cancelled and postponed projects and weak investment levels. 

There has been a recent rise in properties going into receivership, banks unwilling to lend for construction projects and a decline in tenants looking to rent business or residential properties, according to Mark Bailey, managing director of Landwood Group, who says that a rise in auction sales is also evident, largely down to an increase in repossessions.

He said: “Worryingly, at Landwood we are also receiving more instructions over the past few months than we have done for a year or more - instructions for properties that have sadly gone into receivership.

“It is harder for property owners to let business space and for domestic landlords to find tenants  - there’s no doubt that a squeeze is on.

“With each failed building project, banks become more nervous to lend, builders stop building… and we fall headlong into a dreaded recession. Once we do, it’s anyone’s guess how deep it is or how long it lasts.

“The blame for all of this cannot be put at the door of Brexit… well, not entirely. There is no arguing with the fact that this is a period of change - domestically and globally. People err to the negative whenever there is change on the horizon - until events transpire and the scales balance out. The big issue is uncertainty and property is key to all of this. Uncertainty causes negativity, while a solid market has the opposite effect.”

So, if the pointers are all correct and a recession is upon us, what is the advice? 

“Sit tight,” said Bailey. “Whether you are a commercial property owner or a domestic landlord, try your best to ride it out, perhaps for six months, before making any business decisions. Look at your borrowings and don’t over-stretch yourself at this time.

“There are always people who benefit from downturns in the market and they tend to be cash buyers. So if you have cash to invest long-term, a ripe time to buy may be about to begin.

“For the rest of us, it’s time to batten down the hatches and ride out the storm - see you on the other side.” 

Poll: Do you think Britain is heading for a recession?

PLACE YOUR VOTE BELOW

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    It is all in the head.
    Only worry is the clowns that run (try to run) the country !

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    Nothing unexpected about it I have written to my M.P, several times making him aware of this but he disagreed as he did in 2007. What do you expect with a whole raft of anti- LL Regulation including removal of W & T, Deposit interference, Licensing, Penalties, s21, s24, Stamp Duty etc, so Brexit is the least of our worries & don’t us that for excuse. Enjoy the Recession 👍🏻

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    Negative talk never helps and I’m surprised you have written this but I suppose it keeps us reading this headline grabbing article. I’ve very few vacancies in my portfolio and had nearly 100 enquiries on one unit. Even Brexit hasn’t deterred investors and the economy isn’t doing that badly. Yes commercial is a bit down but it’s to do with the change of how we do our business globally and the general shrinking of the high street. We are all adapting.

    I think the UK will be just fine. You should look at inward investment in tech and science as that is booming - There still aren’t enough homes being built so yes we are attacked at all angles by silly policy changes and I hope that us battered landlords can keep the fight up to get our regs and fiscal policy adapted or reversed. 2 million landlords and no one has been able to get the S24 rule modified. Why don’t you help us with that? LT

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    I totally disagree with you, I had aFlat vacant on Acton for months. There is no shortage of Housing & they are Building thousands of Subsided Flats Clearly not required. Media hype I hope it stays fine for you. How can so much damage be imposed on us and people are still prepared to believe everything is fine.

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    It seems demand varies quite a lot around the UK , still seems strong in my area (east anglia)

     
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