Does investing in buy-to-lets still make sense?
Joel Osbourne, lettings director at the Jones Robinson Group explains how the market has changed and where you can earn a good return.
Landlords have had a bit of a battering over the past two years with multiple tax changes hurting their finances and mortgage lenders getting tougher to please.
Not only is there stamp duty payable on all second homes and buy-to-let properties, tax relief on mortgage interest is to be phased out over four years to 2021 to be being replaced with a flat 20 per cent tax credit – and lenders have imposed tougher borrowing criteria on landlords.
This has already had wide-reaching consequences for landlords who own their buy-to-lets in their own name.
Research published recently by the Intermediary Mortgage Lenders Association found that net investment in buy-to-let property had fallen 80 per cent between 2015 and 2017 as a result of all of these changes.
Some landlords have exited the market altogether, but others have found ways to adjust their portfolios, so that they can still make money in today’s environment. Some landlords have begun to look at semi-commercial lets – a flat above a shop for example – which typically offer higher returns than pure residential lets.
It is still possible to achieve high yields, given the correct expert advice on what to buy.
Of course, the scrupulous landlords hang on to their properties as can see the inherent value that bricks and mortar offers over the long-term. Over the past 20 years residential property in England and Wales has returned 9.5 per cent on average each year. This compares to the FTSE All Share index at 6.5 per cent and the average five-year bond at 4.7 per cent.
For expert professional advice on letting your investment property, or on which locations are best to invest, please contact the lettings team at Newbury on 01635 581991.