Is It Worth Buying in a High-Interest Environment?
With interest rates still holding above 4%, many investors are asking the right question:
“Is it worth buying now — or should I wait for conditions to improve?”
The truth? It depends on how you buy, what you buy, and how you fund it.
This blog unpacks:
- Whether now is a good time to buy
- What kind of deals still stack up in a high-rate world
- How rates are suppressing demand — and keeping prices flat
- Creative ways to avoid high borrowing costs
- And how RIUK is navigating this moment
📉 Where Are We Now?
- The Bank of England base rate remains at 5.25% (as of Nov 2025)
- Most 5-year BTL mortgage rates are still 4.5–5.5%
- The BoE has indicated no cuts before mid-2026 unless inflation falls faster than expected
🏠 House prices?
- Halifax reports average UK prices have fallen 1.9% year-on-year
- Activity is down — but so are bidding wars
- In many markets, sellers are accepting 5–10% below asking price
🔗 Halifax House Price Index – October 2025
⚠️ Higher rates are holding back demand — and that’s keeping prices in check.
📊 Real Example: SPV vs Traditional BTL
Let’s compare a typical deal two ways:
|
Scenario
|
BTL (personal)
|
SPV (co-investment)
|
|---|---|---|
|
Entry
|
£70k deposit + £130k mortgage
|
£25k equity (shared SPV)
|
|
Mortgage Rate
|
5.25%
|
None (cash-funded project)
|
|
Gross Yield
|
6%
|
7.2%
|
|
Costs
|
Agent + tax + interest = high
|
Management + admin = low
|
|
Net Return
|
~3.4%
|
~6.5–7% (projected IRR)
|
|
Control
|
Full ownership
|
Shared governance
|
|
Risk
|
High if vacant or non-paying tenant
|
Pooled risk across assets
|
🧠 RIUK View:
SPVs are beating BTL on return consistency, cost control, and risk exposure — especially when interest is over 4%.
✅ How to Tell if a Deal Still Stacks Up
Use this quick checklist before committing:
✔️ Can I achieve 5%+ net yield after fees, voids, and tax?
✔️ Can I fix the mortgage rate for at least 3–5 years?
✔️ Does the location have stable year-round demand?
✔️ Am I buying below current market value (or with uplift potential)?
✔️ Do I have a plan B if I can’t refinance in 2–3 years?
❌ If you’re answering “no” to more than one — park the deal.
💡 Smarter Ways to Raise Capital
Don’t want to borrow at 6%+? You’re not alone. Here’s what we’re seeing:
1. 💬 Private Capital Partnerships
- JV with a peer or HNW contact
- Equity split deals where one party funds, the other operates
- Works well for small blocks, PBSA, or supported models
2. 🧾 SPV Co-Investment Models
- Fixed target IRR
- No mortgage or debt
- Fully managed and hands-off
- Popular with GCC and international investors
3. 🔁 Delayed Completion or Instalment Plans
- Some developers offer spread deposit terms (e.g. 10% now, 10% in 6 months)
- Useful for high-income investors with uneven liquidity
4. 🏗️ Buy Refurb, Then Finance
- Buy un-mortgageable stock cash
- Add value, then remortgage at better LTV
- Avoids paying high rates from day one
🔄 Should You Wait for Rates to Drop?
Not necessarily.
- When rates fall, demand will return
- When demand returns, prices rise
- If you find a deal that stacks now — buy it
- But don’t stretch to force it
“Waiting” only works if you’re saving, improving access to capital, or lining up the right stock.
🧠 RIUK View
This is a moment to be selective — not passive.
We’re still buying, but:
- Only where yield clears 6%+ net
- Only when debt isn’t eating all the upside
- Only when the location makes sense post-rent reform
In many cases, we’re advising investors to sit on capital — or partner via SPVs to gain exposure without solo risk.
📩 Want help reviewing a deal or accessing SPV-based structures that avoid debt? Let’s talk.
