Buy to let News Update
It' a bit difficult to know where to
turn at the moment, for accurate information relating to the true state of
the buy to let market. Most landlords and buy to let investors are only
too aware of the state of the housing market, barely a day goes by without
TV Programs and newspapers commenting on interest rates and the
instability of house prices. After more than a decade in which house
prices have tripled in most areas, property values started a downturn at
the end of last year. The words negative equity and sub prime mortgage
loan are words than many buyers have to get to use to hearing along with
credit crunch and the need for the tighter credit conditions and
affordability constraints.
However, sometimes it is best to avoid
the doom and gloom being reported about this sector of the market and
invariably reports are taken on a national basis. Adopting a more
parochial attitude to your buy to let investment may be the best way
forward at this time. While the actual level of fixed landlord expenses
like
buy to let insurance and
buy to let mortgages remain relatively
stable, property prices in the south east and in particular London have
begun to turn a positive monthly cash flow into a negative one. Local
letting agents and estate agents are a good source of information and will
certainly have their finger on the pulse of what is happening locally.
A well established local letting agency
is often prepared to give advice to landlords and can often alert them to
opportunities. Don’t forget, a letting agent will be still be keen for a
landlord to buy property in an area where he knows they will easily obtain
a tenant. Multiple chain letting agents also are able to afford the
information of what is happening in a number of areas. This form of
research may seem like common sense but a large number of landlords only
ask a letting agent to become involved after they have bought a property.
Adopting the attitude “What can you let, where can i buy it” can really
pay dividends to investors.
Experts believe that the National
picture is far too broad, in some areas property prices are still
increasing and often there is still is simply not enough property to go
around and prices and demand remain high.
Unfortunately many buy to let landlords,
especially those that arrived late on the scene with little equity in
their property are deserting the market in droves and much property is up
for sale. New buyers are failing to join the market at the present moment.
However, landlords that took time to research the market properly, who
bought wisely and have invested in property where there is still a good
demand, are still reaping the benefits. Rental yields have dropped off,
especially in the south east but there are still parts of the country
where rents are increasing.
Most people now agree that the buy to
let industry will continue however, it will become more specialised with
the bulk of the market being made up of professional investors or
landlords with a good deal of experience. This sector of investors seems
set to hang on to their property and is of course better placed to do so.
Many recognise that the current situation is likely to be just a blip and
that all the social and economic indicators are pointing for a continued
strong demand for buy to let property.
What the present situation is doing is
forcing a kind of Tree shake, many of the people who thought that buy to
let was easy and simply bought any property in the hope that it would rise
in value and would be easily rented are now moving on to other more
traditional forms of investment.
It had been anticipated that recent
changes to the capital gains tax regime where likely to see a big sell off
in property; however this does not seem to have happened amongst
professional landlords.
Changes that took effect at the start of
this month mean most buy-to-let landlords are now subject to capital gains
tax of 18 percent, down from as much as 40 percent previously. This
seemingly attractive offer has failed to tempt out many professional
investors
