The 6 Reasons Wembley Rental Properties Could Inflation Proof Your Savings?

Inflation (and recessions) can be nerve racking for people and their hard-earned savings and wealth.

The 6 Reasons Wembley Rental Properties Could Inflation Proof Your Savings?
• Inflation (and recessions) can be nerve racking for people and their hard-earned savings and wealth.
• Yet there are six reasons which make investing in private rental properties a potentially wise investment in these changeable times.
• This article looks at how investing in Wembley property could help you 'hedge' against inflation and protect your savings and wealth against the possible recession.


The cost-of-living predicament is threatening the budgets of many Wembley householders.

Inflation is running at 7.8%, yet the best savings rates in the market are only 2.75% (because of low Bank of England interest rates). This means that the value of people’s savings is falling fast.
To add insult to injury, the possibility of a recession on the horizon could add another nail in the coffin of people’s wealth and savings.

Looking back at the last recession (ignoring the 2020 Covid recession), the Stock Market (FTSE index) dropped 40.1% during the Credit Crunch (2008/9) - scarcely a soothing thought if you worry about a recession looming in the next couple of years.

A recession can have a catastrophic impact on household budgets, as a weaker economy characteristically means that salaries drop, and people get made redundant.

So, why do I suggest Wembley rental properties will help to
protect your wealth and hedge against inflation?

Wembley rentals aren’t perfect, yet in many ways, they go a long way to help – let me tell you why.

1. One of the most significant benefits of investing in residential property is to hedge against inflation. An ‘inflation hedge’ is an investment that defends against the decreased purchasing power of your money that results from the loss of its worth/value due to inflation.

The last time the UK suffered high and persistent inflation was the 1970s.

In 1973, the average British house was worth £9,942. In 1980, that same house was worth £23,287. If the same £9,942 had been invested instead in the stock market in 1973, it would have been worth £19,384 in 1980.
So how did that compare to inflation?
Neither property nor the stock market beat inflation in those seven years (as the goods and services of that £9,942 in 1973 had risen to £25,897 by 1980).

But investing in the stock market between 1973 and 1980, that stock market investor would have lost 25.2% of their investment in 'real terms’, compared with only 10.1% for property investors.
However, there was the bonus of seven years’ worth of rent!

To give you some idea of what that would be worth in today's figures (even if the rent didn't go up during that time frame) ...
The average Wembley landlord will earn £143,304
in rent over seven years.

2. Rental properties have repetitive, regular monthly income, whilst dividends from the stock market are dependent on there being profits which, in a recession, can be hit and miss.

3. Existing Wembley landlords know that the rents their rental properties achieve don’t historically decline during recessions in the medium term.

In 2008, Wembley rents dipped by 5.2%, yet they soon
bounced back a year later.

And even if average rents do go down, every rent is fixed at the start of the tenancy. Also, it is infrequent for a tenant to negotiate a reduction in rent mid-tenancy even if average rents did drop.

4. Property prices sometimes fall during recessions.

In the 2008 Credit Crunch recession, Brent
property values dropped 14.4%.

Dropping from £302,371 at the peak in September 2007 to £258,776 in July 2009 (before they started to rise again).
Yet as I stated above, the Stock Market dropped 40.1% with the Credit Crunch. Also previously, the Stock Market dropped 36% on Black Monday before the early 1990’s recession and 55.3% in 1974.

Which sort of drop would you prefer?

5. (Almost) guaranteed rental payments. Insurance can be taken out for rental payments (you can’t get that on stocks and shares). Also, the government will cover most (or all) of the rent when someone is made redundant and needs to apply for social security.

6. For those Wembley landlords who take a mortgage, inflation can be a benefit. The first is the effect of inflation on mortgage debt. As Wembley house prices rise over time, it reduces the loan to value percentage of your mortgage debt and increases your equity. You will receive a lower interest rate when you re-mortgage in the future because of the lower loan to value percentage.

Also, as the equity in your Wembley rental property increases, assuming you fix your mortgage, your payments stay the same.

Finally, inflation also helps Wembley buy-to-let landlords because rents tend to increase with inflation. So as rents go up, your fixed-rate buy-to-let mortgage payments stay the same, creating the prospect of more significant profit from your buy-to-let investment.

Yet, there are downsides to renting.

Rent arrears can be a worry though. However, during 2021, landlords who used a letting agent were, according to an investigation from Denton House Research, 272.5% less likely to be in arrears of two months or more.

One of the biggest reasons is the more stringent tenant referencing that letting agents tend to do compared to landlords who do it themselves. At our agency, we like to reference tenants carefully for job security, stability, and any history of non-payment on rents, always liaising with previous landlords/agents to see if they were a good tenant.

That is why many tenants with a poor tenancy record are attracted to properties that are not through agents, as they know most (not all) DIY landlords don’t reference their tenants as thoroughly as letting agents do. Solid referencing is not a 100% guarantee you won’t get rent arrears or have your rental property trashed, yet it will go a long way to mitigate it.

One of the things about investing in Wembley rental properties is that buy-to-let investors have more control over their returns than stock market investors do. Buy-to-let provides long term stability and constant income to counterweight the massive swings seen in the FTSE stock market.

There is something reassuring about touching and feeling
your investment – the 'bricks and mortar’.

You must make your own decision when investing in the private rental market in Wembley. If you'd like to chat over the phone for five or ten minutes to discuss where I would be investing in the Wembley property market, don't hesitate to send me a message or pick up the phone.

How are you planning for the spectre of a potential recession?




































































 




Get in touch with us

First Name*
Last Name*
Your Email Address*
Mobile Phone*
Are you looking to*
Please enter message here*
Please confirm that it is okay for us to contact you about this information as well as products and services. (You will always be given the right to unsubscribe at any point in the future)*

Register for Property Alerts

Ever missed out on the perfect property just because you heard about it too late, or the Estate Agent never told you about it as it was slightly outside of your criteria? Never miss out again by using our “Heads Up Property Alerts”.

Latest Properties

Spacious 3 Bedroom House with extended family home and off-street parking in Monks Park, Wembley.

Guide Price

£590,000

3 Beds2 Baths2 Receptions
monks park, wembley

three bedroom semi detached house

extended family home

close to oakington manor primary school

Spacious 4-Bedroom Detached House with Garage, Sauna, and Ample Parking in Wembley

Guide Price

£1,300,000

4 Beds2 Baths3 Receptions
harrowdene road, wembley

large four bedroom house

off street parking for multiple cars

garage

Modern 3 Bedroom Terrace House in Sudbury Town Wembley - Move in Ready!

Guide Price

£600,000

3 Beds2 Baths2 Receptions
Central Road Wembley Middlesex HA0 2LJ

Beautifully Presented Modern 3 Bedroom Extended Terrace House Which is Move in Ready

Bright and Spacious Front Reception Room

Contemporary Open Plan Reception Kitchen Diner at the Rear With Access to the Rear Garden

Meet Abigail

  Hello, my name is Abigail, and I am the Grey in Grey & Co. I started working here in 2002 as a Junior Negotiator and have worked my way up the ranks since then. I took over running the company in 2014 and have been enjoying the roller coaster that is leadership ever since.   During my 20 plus years at Grey & Co I have dealt with the sale of over £100,000,000 worth of property and overseen the management of assets worth £250,000,000 for clients around the world.   I also had the pleasure of working with my father, the founder of Grey & Co, for 15 years before he sadly passed away and from him, I learnt the work hard ethic and our values today are still the ones that he founded the company on all those years ago.   Be Remarkable, Be Passionate, Be Humble and Be Better.   As a community centric boutique family agency, you couldn’t find a better partner to take with you on your property journey.

Meet All The Team

Latest News on the Renters’ Rights Bill

The Renters’ Rights Bill has just passed its latest stage in the House of Commons. Here, we’ll look at what happened and at what it could mean for landlords, tenants and anyone considering selling their rental property investments.

Three Ways Trump Could Influence the Wembley Property Market

Next Monday (January 20th), Donald Trump will be inaugurated as President of the United States of America for the second time. And whether you love or loathe him, there's no escaping from the fact that he's one of the world's most powerful person (again).

Energy Bills in 2025: A Guide for Wembley Landlords

With household heating costs still a key concern, here are some tips for landlords on managing tenant energy bills.