A myriad of tax reforms in 2018 have hit buy-to-let investors more so than any other property owner. Many speculated that continued tax pressures and Brexit uncertainty destabilising the market could deter a lot of people from investing in additional property over the next few years, worried that the risk is just too great.
The second quarter figures from UK finance statistics have highlighted that remortgages of buy-to-let property has grown by 15% in 2018 whilst new buy-to-let investments have fallen this year in comparison with 2017 data.
Additionally, the Buy-To-Let Yield Map 2018 highlights the varied fortunes for investors, with huge variances in potential profits across the UK.
Areas with an abundance of universities and higher education tend to do very well, with cities like Liverpool, Edinburgh and Manchester enjoying annual yields of over 10%.
Whilst areas of the country that are statistically struggling to sell property are also affected by their rental prices. London, Bournemouth and Crewe receive less than a 2% annual return on their investment. It is this reduced return, coupled with increased taxes, that is deterring new investment from entering the property market.
However, many remain optimistic that the property market can still benefit from investors moving forward, with any dip in property investment merely a temporary blip.
Andrew Turner, Chief Executive of Commercial Trust, said: “The expectation was that this would be most keenly felt by those with fewer properties, because adjusting to the changes would be a more painful process for new investors or those with less experience.
“However, the simple fact is that buy to let remains a solid investment option, with strong potential for an attractive and profitable return on capital invested.
“Investors should not be deterred…Demand for rental housing is stronger than ever, the cost of debt remains relatively cheap and the housing shortage is likely to continue.
“Many headlines have focused on one and two property investors who have left the market because they have found it difficult to adjust. The real story has really not been about buy to let becoming unattractive as an investment option.
“I expect to see market rates increase, because margins are wafer thin … [but] landlords have responded to this and there has been significant interest in fixed rates, useful to guard against rate rises.
“Investors are likely to continue to do this as their renewal dates come up and therefore I’m sure the remortgage market for buy to let will remain buoyant over the coming months.”
Have you noticed less people investing in buy-to-let property? How should this sector of the property market be helped in the future? Is it positive that less buy-to-let investors are taking up the housing stock?