Are the buy-to-let boom days really over?

The UK buy-to-let market has and will continue to be a hot topic of discussion as many believe a consistent string of Government attacks on the nation’s landlords have taken the shine off investing in the sector. An increase of 3% in stamp duty tax and a reduction in tax relief benefits, removing the ability to deduct mortgage interest from letting income, has seen many exit the sector or think twice before entering it in the first place.

Add to this the addition of expensive licensing requirements and it’s easy to see why many are being deterred. But is the landscape as bleak as we’re being led to believe? The short answer is no. In fact, the latest research by the Resolution Foundation show that 10% of Britons now own a second home, a buy to let property or an overseas property, up 53% since 2001. The combined worth of those properties is a staggering £941billion.

Similarly, the latest research from property compliance specialists VeriSmart found that over the last decade, investing in buy-to-lets bricks and mortar has brought a better return than gold, cash and fine art.

They comment: “While adjustments to legislation may have stifled the appetite of the amateur buy-to-let landlord, the sector continues to present a very lucrative opportunity and a more concrete investment than other options on the table.

Despite all that has been thrown at it with changes to legislation, Brexit uncertainty and more, London is still offering rental yields of 5% and above.”

But not only does buy-to-let remain a sound investment with the right guidance, the sector has been helped by a change in the buy-to-let mortgage landscape.

Rates on buy-to-let products have dropped hugely over the last few years and the driving factor behind this is the increased number of lenders entering the sector. Not only does buy-to-let offer a good investment option for landlords but it also provides much better margins for lenders when compared to residential rates – a win, win.

Barclays is currently offering a buy-to-let rate of 1.47%, fixed over a 26-month contract which is incredibly low, and this affordability where buy-to-let mortgage products are concerned is helping absorb some of the pressure from Government imposed financial penalties.

Below are some of the best rates currently available in the market and if you would like to discuss refinancing on your current rental property, or securing finance on a future purchase, we are here to help. Contact me and I can advise on how to get the best deal for your personal circumstances.

 

Lender Rate Rate Type Initial Period
Barclays Bank 1.47% Fixed 26 months
Post Office 1.48% Fixed 25 months
Leeds BS 1.49% Fixed 27 months
The Mortgage Works 1.49% Fixed 26 months
Santander UK Plc 1.59% Fixed 26 months
Skipton BS 1.62% Fixed 25 months
Virgin Money 1.65% Fixed 27 months
TSB 1.69% Fixed 25 months

 

Alastair McKee, Managing Director of One77 Mortgages

I recently spoke with Alastair McKee, Managing Director of property finance specialists, One77 Mortgages, who adds:

“The demise of the buy-to-let sector has been greatly exaggerated and on ground level, we’re still seeing plenty of people entering the market, with a large number still buying in their personal names as opposed to a limited company.

While the Government’s tax changes are now starting to kick in and some landlords may exit or opt for commercial investments after receiving their first tax bill, the sector remains very attractive.

However, our advice would be that getting the right tax advice is essential when looking to invest in order to maximise profitability. Each accountant will have their own rationale in terms of the best course of action for a client, so don’t just settle with the first one you come by, shop around and find one that suits your individual situation.

You could argue that buying at the moment is a shrewd move, especially given all the uncertainty out there, but there are plenty of bargains to be had at all levels of the market with the potential of a healthy return for those serious about investing.”

So there you have it. Buy-to-let isn’t the poison apple you might think and with the right guidance from established industry professionals like ourselves, it remains one of the best investments you can make. In fact, the latest research by the Resolution Foundation show that 10% of Britons now own a second home, a buy to let property or an overseas property, up 53% since 2001. The combined worth of those properties is a staggering £941billion.

If you have any queries or need advice about what or where to buy for rental investment, do contact me and I will be happy to help.

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About the Author

A board director since 2001, Marc oversees the company’s London rentals operation as well as marketing and developing strategies for new business. He has been instrumental in the company’s expansion, working closely with managing director Anita Mehra to develop its core services and frequently co-hosts property seminars for investors in many international locations. Read more about Marc von Grundherr here - Read full profile

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