The dream of buying property and becoming a landlord has been fuelled by hours of Homes Under the Hammer and the constant message that the safest investments are in bricks and mortar.
Recent changes concerning both regulatory and fiscal changes have had an impact on this sector. Basically, the government introduced tax changes for people who had an income from letting a property. It was thought this may damage the perception of the buy to let opportunity for new comers to the business. However, it seems that despite these changes, people are adjusting well to the new rules. Investment in additional property to achieve additional income through buy to let remains just as tempting a proposition as ever.
Andrew Turner, chief executive of specialist mortgage broker Commercial Trust is confident that the short-term pain to adjust to the changes will not be felt by the majority of BTL investors. He says:
“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."
Headlines can focus on the scaremongering of property investors quitting the market. This could be because they have found it difficult to adjust to the changes. Change affects every industry at one point or another; it is simply a case of being well informed and well prepared to act accordingly. Buy to let is definitely not unattractive as an investment option.
More and more landlords are taking advantage of longer-term fixed rate mortgages as a way to safeguard against future potential rate rises.
Turner goes on to say:
“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.”
We’ve seen the lettings market remain strong throughout the final quarter of 2018; in fact, Oulsnam’s predictions for 2019 are focused on increasing demand for rental housing. Investors should not be deterred from forging ahead with investment in buy to let properties; the cost of debt is relatively cheap and the housing shortage is likely to continue for some time yet.