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The Buy to Let Market

The Buy to Let Market

The buy to let market is changing as a result of recent legislation.  As a buy to let investor, you need to ensure that you are clear of the implications of the recent tax changes. 

Landlords in the higher rate tax bracket will no longer be able to offset mortgage interest against profits.  Some basic tax rate payers may also be pushed into the higher rate once their rental income has been taken into consideration.  This reduction in relief is being phased in over the next 3 years. 

This means that these landlords will have to pay income tax on their revenue and not on profit which had been the case previously.  Landlords should, therefore, review their portfolios to ensure that they are continuing to profit from their investments. 

There is also the additional 3% surcharge on stamp duty applied to investment purchases, which needs to be taken into account when purchasing investment property. 

Those landlords wishing to sell properties will need to take financial advice to minimise taxes such as capital gains tax which is due on profits over £11,300. 

If you are considering buy to let investments be sure to research the market prior to your purchase.  There are still great places to invest in the UK; you just need to do your homework and ensure that you buy the right property in the right area at the right time and for the right price.  As always when it comes to property investment, you should review such things as transport links and proximity to good schools and local shops. 

Locally, Birmingham remains a great area to invest in.  Rental values and yields are good and properties tend to retain their value so that when you come to sell, you’re in for a tidy profit too.

Banks are still offering great rates on buy to let mortgages and this has helped current landlords to retain their footing in the market and new investors to dip their toes into the unknown.  When taking out a buy to let mortgage, you should review all costs such as the interest rate and arrangement fees to ensure the loan remains economical. 

If in doubt, you should speak to a good independent broker who will be able to point you in the right direction. 

If you currently own buy to let investment property and would like a reputable award winning local estate agent to manage your portfolio for you, please get in touch.  Our lettings team is professional and very well qualified to help you to secure great tenants for your property.

If you’re looking to buy investment property, please review our investment page.

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