How to Protect Your Property Portfolio from Rising Inflation


Property assets appreciate gradually over time and are considered a fairly inflation-proof investment since, although the economy may be sluggish, it is very unusual for bricks and mortar to drop in value.

However, with rising inflation putting pressure on other aspects of owning rental properties or managing a portfolio, there is the likelihood that higher mortgage interest rates, utility costs, and council tax will impact your bottom line.

Here we’ll run through some suggestions to help you maintain profitability, along with guidance about assessing the fair rental value of each rental property in your portfolio to recognise the increasing demand for quality accommodation, particularly in the most sought-after areas of West Sussex.

Why Does Inflation Impact Rental Property Profitability?

Inflation itself doesn’t normally have any marked impact on the valuation of a property, but it can affect other outgoings. Managing those costs during times of swift price rises can be essential to ensure your portfolio achieves the returns you expect to make on your investments.

Selling up is also inadvisable, given that the highest returns are realised over at least ten years. Purchasing a residence with a suitable rental value should cover the running costs, with a profit element.

This ‘dual’ return is one of the key reasons property is such a valued asset, whether to retain towards retirement as a low-risk investment or benefit from long-term market growth.

An important consideration is that while interest rates may mean some expenses are higher, it also means that average rental premiums have risen. In many cases, the best course of action is to re-evaluate your portfolio to see where increases would be reasonable and fair.

In some situations, landlords with tenants in situ tied into a tenancy agreement may be limited in their recourse to introduce higher rent, so it can be useful to look at proactive ways to manage the costs associated with a portfolio.

Other solutions include marketing a vacant property or new portfolio acquisition as a short-term holiday rental, if permitted within any mortgage agreements you may have, seeking a higher income while interest rates settle.

Controlling Rental Property Costs During Rising Prices

For most landlords, the mortgage is the highest expense linked to a rental property. Although interest rates are currently high due to the successive base rate increases introduced by the Bank of England, they are forecast to revert in the coming months.

The Economics Observatory estimates that within the next 12 months, inflation will fall to 2%, in line with governmental targets, and the current average 6% mortgage interest rates will fall to 3.3% by 2026.

In the meantime, rental mortgages can be flexible, and professional property investors may have several options to consolidate, extend or reduce their payment obligations through:

  • Extending the mortgage term to reduce monthly repayment costs. Some lenders will offer terms of up to 40 years at the outside, but most financial institutions will offer mortgage terms of up to around 30 years.
  • Switching from repayment to interest-only. Although fewer buy-to-let homes are purchased on a repayment basis, this could be an effective solution in this circumstance.
  • Consolidating mortgage borrowing. This may benefit portfolio owners with a larger volume of properties, where lenders keen to secure their business may be more competitive when considering a larger portfolio mortgage rather than a standalone product.


Much depends on your financial position and any borrowing products secured against a rental home. Still, there are often a few options that can be advantageous, even during a period of high-interest rates.

Meeting Market Demand to Improve Property Portfolio Returns

The next area to consider is the income your portfolio provides and assessing how the costs of running and owning a property have changed over the last few years. We recommend landlords and investors compile detailed budgets to have comprehensive oversight of their margins, looking at:

  • Maintenance and repair costs.
  • Council tax and utilities.
  • Borrowing interest and product fees.
  • Gas and electricity safety inspections.
  • Landlord licences for HMOs.
  • Insurance coverage.


Once you have a clear picture of the costs, it becomes easier to evaluate whether the rental yields currently achieved are sufficient, and alongside a valuation, can help you make informed decisions about the best way forward.

The biggest cost driver is void periods, where a portfolio property that is not generating an income can swiftly become a drain on your broader investments, given that most of the operational costs remain, regardless of whether the residence is untenanted.

Working with an accomplished and highly regarded lettings management team can improve your prospects significantly, advertising properties to the right demographics, using outreach marketing to reduce the duration of vacancies, and ensuring your rental property is presented in a professional and appealing manner.

Modifying Portfolio Properties to Boost Income Revenues

Finally, there may be opportunities to increase demand, interest and the rental market value of a portfolio property, although we recommend owners consult a local agent in the first instance to ensure they understand which upgrades or changes are most relevant to the local rental market.

Options may include, but are not limited to:

  • Permitting tenants to take up residence with a pet, incorporating the safeguards around damage and maintenance within your tenancy agreement documentation.
  • Making improvements to the condition, décor, exterior or space inside the property – this may range from simple refurbishments to more sizeable extensions or incorporating off-road parking and dropped kerbs to enhance accessibility.
  • Investing in the energy efficiency of a portfolio asset, where tenants are keen to secure rental properties that are future-proof, low-cost to run, and have an excellent energy performance rating.


The right solutions will vary and should be tailored to your portfolio, the location of your property assets, and any shortfalls in your rental yields you wish to address. However, even where costs are rising, property investors can make astute, targeted decisions to ensure their portfolios continue to deliver the returns they expect.

For more advice about managing your property portfolio in and around West Sussex, please contact the local Tod Anstee Chichester office to arrange a convenient time to talk.