Can buy-to-let overcome significant obstacles?

Buy-to-let landlords have been hauled over the coals of late, and with just days to go until our new Chancellor Philip Hammond delivers his Autumn Statement, questions need to be asked about whether they are going to see any relief. Industry pundits are, of course, calling for a reversal of some of George Osborne’s measures to curb the lettings industry, but how much impact have new taxes on landlords had so far? And what is the likely outcome of the most recent development which sees the Bank of England weighing in to impose further restrictions on BTL lending.

Up to now, property has continued to be great investment option despite Brexit uncertainty and the additional tax burden of Osborne’s stamp duty hike on second homes. Indeed, after a temporary lull in the market immediately after the additional 3% tax increase which came into effect on 1 April this year, figures show that landlords and buy-to-let investors remain active and optimistic.

The national data paints a mixed picture. Although Rightmove reported a 30% increase in buyer enquiries from landlords and property investors since May as well as a 6% annual increase in rental supply in Q3 2016 back in October, more recent figures from the Residential Landlords Association suggests that a quarter of landlords plan to sell up in response to the additional tax burden they now face. However, this latter report is countered by the recent Landlord Voice survey which reported the majority of landlords would not be putting plans to expand their portfolios on hold because of Brexit or the reduction in tax relief on BTL mortgages.

It’s a confusing picture. Here at Pillars, we work with a variety of buy-to-let investors, from accidental landlords and those with just a few properties, to professional investors with large portfolios. I believe that despite obstacles, buy to let remains a great investment option. Even now, in what is arguably one of the most challenging letting markets we have seen locally in many years, rental properties are still moving, at least for those agents who are willing to work closely with landlords, find the right angles and introduce the right tenants.

When you’re looking for areas in which to invest in buy to let, there are a number of considerations and characteristics of a healthy local lettings market. Take our own area where landlords have access to a wide variety of investment options, from apartments in central Guildford to luxury country homes in and around The Horsleys and nearby villages. With a range of properties and price options, it’s a fantastic area for prospective landlords, whether you are dipping your toe in the water for the first time, or building upon years of experience. Equally, and in spite of changes to taxable rent income, there are some great buy-to-let mortgage deals around as rates remain low, although LTV ratios may become less favourable as a result of the Bank of England’s new powers.

So although landlords are facing increasing challenges as Government tries to both free up properties for first-time buyers as well as encourage greater investment elsewhere, it’s clear there are still significant opportunities in buy to let. I hope the upcoming Autumn Statement will offer landlords some respite from the recent barrage of obstacles – we’ll be listening in on Wednesday to see if Hammond will respond to calls from the industry to reconsider some of the recent attempts to rein in buy-to-let.

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