There have been a lot of buy to let obstacles this year. Hikes in stamp duty, reductions in tax relief, tightening of mortgage lending criteria, and, of course, Brexit. And yet, landlords have pushed back, undeterred.
Investors Undeterred By Buy To Let Obstacles
Industry figures released last week show that, rather than being put off by these buy to let obstacles, landlords swept back into the market with gusto in September. Connells Survey & Valuation have released figures also showing a strong and successful September, with buy-to-let valuations rising 24% on August’s figures. Rightmove, too, have revealed a 30% jump in buy-to-let enquiries since May.
Another surprising statistic: in the nine months of 2016, to end of September, more has been lent to landlords than over the same period in 2015. Buy-to-let valuations over 2016 are 0.4% up on 2015.
New rental listings, according to analysis by Rightmove, in the third quarter, were 6% higher than in 2015. Anticipated drop-offs in investor activity affecting tenant choices proved to be unfounded.
From London to the North West
Even in the heady London property market, there was a year-on-year increase in rental listings of 15% over Q1-3 of 2016. As such, these high stock levels on the market led to a drop in asking rents in Q3, down 0.7% on Q2, staying below £2,000 a month. Of course, up in the North West where things are weathering the Brexit storm best, during the same period, rents went up 2%.
In the run up to the changes in stamp duty in April, there was an inevitable rush to close on property purchases in the first quarter of the year. As such, there was a significant drop-off come April, though this may well be down to many property purchases being hastened through before April’s changes hit.
Since then, things have really bounced back. One feature of the recovery seems to be a trend for investors knocking sellers down on asking prices to take into account those stamp duty charges.
Planning Pays Off
For those investors who have factored in those tax and policy changes to their financial planning, there are still strong returns on the cards in the property market. Especially when compared to the dismal performance of savings, bonds and equities, the long term ongoing shortage of social housing and a dearth of house building, is making property an increasingly attractive investment option.
Alistair Hargreaves, from John Charcol mortgage brokers, says:
“I can’t see Government rescinding the tax changes they’ve announced and I don’t see the Bank of England making it any easier for lenders. But that said, the flipside is that lenders are having to innovate to get business and there are still lots of competitive options available for landlords.”
In addition, Mr. Charcol mentioned that despite tighter lending criteria, there are some innovative buy-to-let mortgage options available. Moreover, he recommended that in most cases landlords should consider longer term fixed rates or lifetime variables which remove some of the uncertainty for their finances.