It can be quite overwhelming and scary when you listen to everything that’s happening in the property industry at the minute.

It can be difficult to make sense of the upcoming (and proposed) changes to the rental market, and how we can mitigate any potential problems, in order to keep growing and developing our business.

To help our members feel more prepared and confident ahead of next year, we recently ran a session inside The Hive Members Club where we invited two of our very trusted friends (and industry experts), Andy Graham and Emma Stubbings, to discuss the realities of what's going on at the moment, and what they're already doing to safeguard their own business.

The session was so insightful that we thought we'd share a small snippet of their advice here, for anyone else that's feeling unsure about what they can do in their own business during this turbulent time.

Enjoy the read!

⚡️ Rising interest rates & navigating deals in uncertain times

With rising interest rates come higher loan repayments and mortgages. Which, unsurprisingly, is causing a lot of uncertainty across the property world right now.

For those currently looking at deals, preparing to invest, or in the initial stages of a deal, how do you continue to engineer those deals in unsteady times? How will the uncertainty of more expensive rates impact your decision-making?

You'll perhaps need contingencies and alternatives in place, but most of all you'll need to make sure you're on-the-ball when it comes to preparing, stress-testing, and planning.

If you have refinances coming up, or if you have a deal going through that's going to take another 2-3 months, you are going to have to factor in those predicted higher rates and really consider if the deal still works for you – can you afford what the new interest rate will be? does the deal still make sense at 6%? could the bank have issues with your stress-testing? would those changes actually alter the economics of what your refinance looks like?

⚡️ Adjusting our thinking when assessing deals

It's time to really adjust our thinking – we can no longer assess deals in the way that we have been doing. We need to factor a lot of margin into deals, and look at if it's really worth doing.

Really focus on stress-testing those deals at those higher rates, and ensure you have complete confidence in your due-diligence process, in what you are buying, and in the level of conversion you can achieve.

⚡️ Thinking about contingencies and alternative strategies to manage risks

When we're thinking about safeguarding, the obvious thing that we can all do is to increase rents – it's not what people want to hear, and it's not what the majority of landlords want to be doing. But ultimately, if we can push the prices up, that does remove a bit of a risk when it comes to interest rates going up, leaving more capital in the deals, tenants handing their notice in because we've lost certain powers etc.

These are real consequences of the changing times, and do unfortunately impact on everyone involved.

Emma also mentions in the session about how her business is focusing more on high cash-flowing strategies moving forward (like HMOs and SAs for example), instead of more development opportunities, due to the continued uncertainty and risky planning time-frames. Will you be making a shift to an alternative strategy too?

⚡️ The proposed changes in legislation for the renters reform bill and how we prepare for those

There has been a lot in the news recently about the changing legislation for the renters reform, and how these too may impact our business.

Everything is still up-in-the-air regarding these proposals at the moment, due to the upheaval in government recently, but we do think things like removing 'no fault evictions' and stopping landlords generating fixed term tenancy agreements are going to be popular with the general population. So what can we do to prepare for this potentially happening?

In the student market, if the government decides to remove the ability to generate fixed term agreements this will ultimately put our tenancies at risk – as our groups could give notice over the summer period when exams are finished. How do we reduce that risk? We can bring all of our tenancies forward, running them from July - July or June - June, avoiding early notices and voids in tenancy. If you're in the student industry, this change in academic cycle will take time to engineer if you're already up-and-running, so it's best to start planning for that as soon as you can.

You can also write to your local MP and your University's student accommodation office, and let them know what's going on and how much these changes will impact the market (take a look at Scotland for example, and how these changes have caused a huge lack of student accommodation and impacted on student homelessness). Tenants are particularly unaware of what could happen should these changes come into play, and how much an impact it will have on stock in the local area.

⚡️ How to get ‘match-ready’ for a recession

Thinking about the year ahead, it's important that we aren't complacent. Whilst there may very well be opportunities to take from a recession, we have to make sure our house is in order first and foremost. So ask yourself these questions:

• Are my staff happy, and where they need to be in terms of skill and development?
• Are my properties up to the right standards and specs?
• How are we keeping our tenants happy – is our customer service good enough?
• Are we keeping hold of our tenants?
• Are we reducing costs, and could we be saving money anywhere?
• Have we got systems, processes, and operations in place?
• Could we be more efficient in any area of our business?
• Are we wasting time, energy, money, or resources in any areas?

These are all things that are going to impact our ability to grow and take advantage of any opportunities that come our way. So really assess your whole portfolio and business, looking for any potential weak-spots or windows of opportunity.

Also, having some liquidity in the business is a good thing right now due to all the uncertainty surrounding rising interest rates – allowing yourself a bit more flexibility when it comes to taking those opportunities and safeguarding against any possible risks.

⚡️ Surrounding yourself with knowledge

If you’re feeling really uncertain about your next move in property right now, one of the best things you can do for yourself is to surround yourself with people who have experience and confidence in different strategies (and in your strategy in particular).

Whether it be a community like The Hive, a mastermind group, or a mentor, building a solid support network and having access to a wealth of knowledge will give you more security when assessing deals and making those strategic business plans.

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If you'd like to listen to the full session recording on this topic (featuring Andy Graham, Emma Stubbings, and Jade McNeil) you can join The Hive today and gain immediate access.

Monthly and annual membership subscriptions available.

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