Property can be an immensely useful tool for footballers to secure their wealth. Investing in buy-to-let (BTL) properties can allow you to diversify your money into a solid, real asset that can grow in value during your career, provide an income when you retire, or both.
You may have read our previous blog about the different considerations professional footballers may have when constructing a BTL property portfolio, including how where you are in your career may partially determine whether you invest for growth or income.
However, you may have recently become aware that average rental yields that provide income to BTL investors have fallen.
Statistics published in FTAdviser show that rental yields in the first quarter of 2022 were just 5.7%, a fall from 6.3% during the same period in 2021.
The north-west has been the worst affected, with yields dropping a whole percentage point from 7.7% in 2021 to 6.7% this year.
So, find out what a fall in rental yields means, and how we can help you manage your property portfolio here at ProSport.
A fall in yields may not mean you need to tinker – yet
A fall in average yields means the amount you can gain from rent payments is, on average, smaller than it was a year ago.
There are many reasons this could be the case, and some factors that may currently be at play include the cost of living crisis and rising mortgage rates.
The question this may leave you with is whether or not you need to make changes to your portfolio in response.
Realistically, this will depend on your circumstances. For example, if you’re still in the middle of your career then the majority of your income will probably be sourced from your wages. In this case, there may not be much point doing anything.
In fact, even if you’re nearing the end of your career or you’re already retired, there still may not be a pressure to make changes. Yields haven’t fallen to 0% so, if you have other income streams, you may not have even noticed an impact on your bottom line.
This decision will also depend on where your properties are. If your properties are in the higher average yielding areas, such as the north-east or Yorkshire, then the income you’re receiving may still be sufficient.
But of course, just because you’re still seeing a steady income from your portfolio, it doesn’t mean sitting back and holding is necessarily the best solution.
For example, if you’re looking to retire in the near future and you could use the additional income, yields may matter more to you now than ever before.
In that case, it may be worth looking whether you can adjust your portfolio to target some extra income to ensure you can live the kind of lifestyle you want.
Similarly, if your properties are in areas that have been most adversely affected, such as the midlands or London, it may be worth considering changing your strategy.
No matter what you want to do, make sure you speak to an expert first. A financial planner can advise you on whether making changes right now is appropriate, or whether holding tight is the right option.
Property growth is continuing in 2022
It’s worth noting that just because rental yields have fallen, the wider property market has actually continued to grow.
House prices saw huge increases in 2021, as thousands of people who couldn’t move during lockdowns in 2020 took the opportunity to find a new home. This, according to the Guardian, drove average prices up by 10% – the fastest rate of growth in over 15 years.
As a result of this enormous growth, many experts and analysts feared that the property market would suffer this year in comparison.
But, according to the UK House Price Index, which documents actual house price figures in the UK, this is not what’s happening.
The index shows that average house prices were still around this level of growth in March when data was last available, rising by 9.8% year-on-year.
That means, even if rental yields have fallen for your properties, the difference may be covered by an increase in the value of the property itself.
This is obviously good news if you’re investing for growth rather than income, too, as increasing house prices makes it all the more likely that you’ll be able to cash in on a profit when you come to sell your properties.
Have an expert review your situation
Whether you’re investing for growth, income, or a combination of the two, there’s no substitute for speaking to a financial expert when you’re thinking about making changes.
At ProSport, we can help you manage your property portfolio and make the right decisions with your properties to suit your needs.
We can explain what the fall in rental yields means for the balance of your portfolio, and help you decide whether it’s worth making changes that target growth or income.
Crucially, we understand football and the particular challenges that professional footballers face. That means we can provide specific, personalised advice that takes your career into consideration.
Work with us
If you’d like to find out how working with us at ProSport can give you the reassurance that your BTL properties are doing what you need, please get in touch.
Email email@example.com or call 01204 602909 to find out more.
This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
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.