Positive outlook for Buy to Let Landlords
There has been a significant increase in the last few months in Buy to Let Landlords looking to acquire further properties in Birmingham and Worcestershire as confidence returns to this part of the market, reports Andrew Oulsnam, Managing Partner of Robert Oulsnam & Company.
The increase in capital gains tax will impact to a degree but it is far less than had been threatened in many parts of the press. A typical Buy to Let landlord sees his income from two areas – the first is the rental income where gross rents rental returns are running at around 5% and the second is the capital appreciation. Although this is not particularly significant at present, it has often averaged around 10% per annum and taken over a period of years gives a return on a Buy to let investment in excess of 10% as an average, far more than can currently be achieved in the stock market or in the bank. Although the increase in capital gains tax will affect this, we do not believe it is large enough to deter would be buyers.
The lettings market has been booming for the last six months with demand for properties to rent up substantially on last year in the Birmingham and Worcestershire area and we have certainly let far more properties than ever before. Rents are starting to rise with a shortage of the best sort of property and at the same time tenant eviction and arrears is down slightly on previous years due to improvements in property management.
The most popular types of property continue to be modern 2 and 3 bedroom terrace and semi detached houses where rental return is at its highest and which can often be let within days of going on the market. The supply of mortgages for buy to let has also improved in recent months in line with the house sales market although there is certainly not enough mortgage money as landlords would like to see.