Tougher rule and regulatory changes contributed to what was a rather difficult 2017 for many buy-to-let landlords, and yet, for a lot of people, buy-to-let continues to seem an attractive income investment, believes a leading property auctioneer.
The 3% Stamp Duty surcharge for those purchasing additional properties, the reduction in mortgage interest tax relief, and more stringent lending conditions have made buy-to-let a less appealing investment option for many landlords.
“Government policy has offered investors little comfort, with the gradual phasing out of tax advantages, all on top of 2016’s 3% second home Stamp Duty increase,” notes Gary Murphy, a Partner and Auctioneer at Allsop.
Murphy believes that political and economic uncertainty, alongside the tightening of mortgage lending criteria, are forcing many landlords to “review their portfolios”, insisting that those who have not will find this task “at the top of their New Year to-do lists”.
“New lending stress tests to be introduced from January will impact all private landlords, regardless of portfolio size,” Murphy adds. “Both professional and accidental landlords will be affected.”
Despite this, he insists that there is “still appetite in the market” for new buy-to-let property acquisitions.
He advises buy-to-let landlords looking to expand or adjust their portfolios in response to tax changes to focus on growth areas and opportunities for value enhancement.
Murphy explains: “London’s suburbs, where prices are considered relatively affordable and housing demand remains robust, can still offer investor value.
“Regional cities are increasingly regarded as the smart buy in 2018 for capital growth and strong returns.”
If you’re thinking of buying to let in London, we have the eight key hotspots for your next property purchase: http://landlordnews.co.uk/8-key-london-hotspots-property-2018/
You can also find expert predictions on how the London property market will fare during 2018 over on our friend Just Landlords’ blog here: https://www.justlandlords.co.uk/news/london-property-market-2018-forecasts/