A successful portfolio landlord has encouraged BTL investors not to buy on a “hope and a prayer of capital growth” this year, but instead to focus on yield and cash flow.

Adam Lawrence, who has built up a portfolio of between 600 and 700 properties and hosts the Propenomix podcast, has unpicked a number of new housing and economic reports, and in a blog post advises others not to rely on Local Housing Allowance rising to bail out yield.

In a high-rate environment, investors can’t bank on yield compression (when property prices rise faster than rents, pushing yields down) to make them rich – instead they need a hard cash yield today, says Lawrence. “The North outperforming the South is basic yield mathematics at work - it’s why I’ve built my portfolio the way I have. Risk management,” he adds.

Current

Lawrence believes that the current 5.1% unemployment is not a crisis, but a significant softening compared to the past seven or eight years. “It puts a lid on wage growth,” he explains. “If tenants are nervous about their jobs, they don’t bid up rents. We are moving from a landlord’s market to a more balanced one. Watch your void periods.”

He stresses that the government has run out of “other people’s money”. For property investors, this signals that the era of handouts is over. “Do not rely on Local Housing Allowance rising to bail out your yield - we already know that this current government is ideologically opposed to it,” Lawrence says. “If the state is shrinking, the safety net is getting holes in it. You need tenants who can pay from their own earnings, not the state’s.”

Normal

He believes the ‘new normal’ means higher rates, higher regulation, and a desperate shortage of supply, meaning that 2026 will be a year for the brave, but only if the numbers stack up on day one. “Do not buy on a hope and a prayer of capital growth; buy for yield and cash flow,” he advises.

And while the Renters’ Rights Act is set to drive small landlords out, which reduces supply and pushes rents up, Lawrence reckons that for those landlords who stay the course and professionalise, the rental growth prospects are strong.

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