The rise of the ‘amateur’ landlord has been a striking feature of the UK property market in the past 15-20 years – but, with George Osborne’s recent changes to the tax regime, is the buy-to-let boom now dead?
For many, it’s been the most fantastic ride. On average, £1000 invested in UK buy-to-let in the final quarter of 1996 was worth a staggering £14,987 by the end of 2014 – a return of 1,400%.
But three high-profile changes to the tax regime – the removal of tax relief on mortgage interest payments on residential property, a sharp increase in Stamp Duty Land Tax (SDLT) on buy-to-let properties, and the revision of the Wear and Tear allowance – have had many wondering if this was the end of the buy-to-let model.
But a range of industry experts interviewed for a brand new report commissioned by UK property website NetHousePrices.com, “The Buy To Let & Property Investment Tax Guide 2016”, feel that the buy-to-let market is far from finished.
Financial adviser Brian Dennehy of Dennehy Weller & Co explains: “this is not the end, just a sensible interruption. The buy to let boom is dangerous, both economically and politically.
The older generation of landlords are pricing their kids out of the market – an economic problem and political one too.
Plus the volume of people who think ‘my buy-to-let is my pension’ is not worrying me alone. When the cycle turns down the Tories don’t want blood on their hands – so they would rather let some air out of the bubble now, than make the crash worse later by doing nothing.”
Stephen Barratt, private client tax director at James Cowper Kreston says: ‘The new rules will make the investment less attractive to investors who borrow to invest in buy-to-lets, but many will ask themselves the question “Where else can I invest with the same return?”
Buy-to-let volumes might reduce as a result of income tax changes but many will still see it as a viable investment once capital growth is also taken into account.’
Hannah Wilde at property investment firm Knight Knox, is more bullish: “No: the buy-to-let market has been thriving for years because of optimum market conditions (namely rising house prices, rising rents and a lack of available housing across the whole of the UK), so we believe the market is still incredibly buoyant.
Although the market is changing (namely from the introduction of the new stamp duty tax levy on buy-to-let properties), this will not necessarily satiate demand-people are hypnotised by the market’s ability to generate above-average returns, as well as high tenant demand through the lack of available housing on offer.
With house prices and rental demand expected to continue growing in the years to come, we expect the buy-to-let market to continue thriving into the future.
Therefore, far from being the end of buy-to-let, we predict that the market will continue to grow this year and beyond.”
Readers can get a copy of the “The Buy To Let & Property Investment Tax Guide 2016” fromhttp://nethouseprices.com/track-url/tax-report.
About NetHousePrices:
Nethouseprices was one of the first websites set up in 2004 that specialised in providing sold property prices recorded in England and Wales, by the Land Registry since 1999 and has since evolved to become a favourite destination for property professionals and the consumer alike. Nethouseprices is privately run by a team of property professionals who are qualified chartered surveyors and property developers with over 50 years experience in the property industry between them.
This revolutionary online company enjoys traffic of around 6,000,000 views per month and was purposely set up to make the property market more transparent and to help to empower consumers to make more informed property decisions. They have provided an array of free property information such as sold prices, property listings for sale and to rent, Industry news and local information to help the consumer and property professionals.
Nethouseprices provide transparent and instant online valuations of your home. They have also teamed up with your local estate agents who have the expertise to advise on the value of your home for free to provide that extra personal touch.
SOURCE: NetHousePrices.com
