Hang onto your buy-to-let property — even if it means you need to bear some pain in the short term.

That's the word from Tony Clarke, MD of Rawson Properties, who says that those who have taken the long term view and ridden out interest rate fluctuations have ended up in a very strong position.

Interest rates are now three percent higher than they were two years ago, and analysts are forecasting them to rise by another 0.5 percent in October — which in turn is convincing many investors to sell their properties.

Buy says Clarke, if at all possible, hang on for now.

No tenant shortage

“Although it is impossible to generalise, we estimate that most new investors in the middle and lower-middle brackets under the new conditions still cover their monthly bond repayments in three to four years. Thereafter, their investments become steadily more profitable.”

Moreover, there is no shortage of tenants at the moment — with higher prices keeping a number of would-be buyers out of the property market.

According to Clarke, you should be able to find a new tenant within a month or two if your current tenant opts to move.

Lower that increase

If as a buy-to-let investor you find that your annual rental increase has chased a tenant away — with market-conscious tenants often leaving within two years to find cheaper rentals elsewhere, which is possible due to the new units still coming on the market, you could always lower that increase.

Most rental agreements still have a 10 percent per annum escalation clause but you could convince your existing tenant not to move by agreeing to a smaller rental rise for a year or two.

Clarke said that the vetting, selection and management of tenants is a specialist operation and is best left to experienced agents, but added the basic soundness of investing in buy-to-rent property remains a "proven fact".