In 2014, Claire and Simon Hancott’s journey into the world of property investment began modestly. Interviewed in Inews today, they tell how they sacrificed luxuries, eating baked beans on toast for three weeks, to scrape together enough for their first buy-to-let property. Fast forward to today, they boast a portfolio of 12 rental properties and are on the cusp of acquiring four more. This expansion comes at a time when many landlords are exiting the market.
The Early Years and Growing Portfolio
Claire, 34, recounts how the couple’s property venture started. “When we bought a house together in 2014, we were determined to keep Simon’s townhouse and rent it out,” she says. This property became their first rental and laid the foundation for their future investments.
The Strategy Behind Their Success
Their approach has been methodical: purchasing properties with the maximum mortgage they can secure, then remortgaging to release equity for further acquisitions. Despite rising mortgage rates impacting their returns, the Hancotts remain steadfast. They now handle mortgages ranging from £750 to £1,900 per property and absorb most increases to avoid losing reliable tenants.
Challenges Along the Way
The journey hasn’t been without its challenges. Claire admits their profits are modest, often just a few hundred pounds per month per property. Unforeseen expenses like boiler repairs can quickly eat into their annual profits. “We reinvest what little we do make back into maintaining the properties,” she adds, emphasising their commitment to high standards for their tenants.
Understanding the Market Dynamics
A key driver behind other landlords’ exodus is the surge in mortgage rates, partly due to the Bank of England’s base rate hike from 0.1% to 5.25% in recent years. This increase has pushed the average two-year buy-to-let mortgage rate to around 6%.
The Hancotts’ Unique Approach
Despite these market conditions, why are the Hancotts doubling down on property investment? Claire, an accountant and business owner, believes in the long-term value of UK property. “The average UK property price, adjusted for inflation, is at its 2003 level. We see this as an undervaluation with significant future potential,” she explains.
Adapting to Regulatory Changes
Landlords now face stricter tax and regulatory landscapes. Before 2016, mortgage payments could be deducted from rental income for tax purposes. This has been replaced with a tax credit system, which can increase tax liabilities for higher-rate taxpayers. To navigate this, the Hancotts now purchase properties through a limited company, benefiting from lower corporation tax rates.
Long-Term Vision and Resilience
The couple’s plan is clear: continue expanding their portfolio over the next decade, then focus on paying down mortgages. By retirement, they aim to own 40 mortgage-free properties. “The housing market has historically proven resilient against major events,” Claire asserts, confident in their strategy amidst global uncertainties.