Buy-to-Let Investors Left Reeling from Stringent Regulatory and Tax Changes

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This year has proved to be quite tough for investors of buy-to-let properties. Many of them are reeling from the fact that the latest wave of regulatory and tax changes are quite stringent.

Profits were squeezed and thousands were deterred from using rental property as a means to invest pension income in light of the new government crackdown. Only 2% of savers aged 55 who are meaning to release cash through the reforms on pension freedom are considering the possibility of putting that money on properties that can be used as buy-to-let ones. This is according to the data gathered by Hargreaves Lansdown.

Still, property prices and rental rates are on a steady climb, and financing for a mortgage has still remained considerably cheap. All these signify that the buy-to-let market is pretty far from being dead.

There is big money in the sector for private rented properties. The total value now is at £1.4 trillion, which means that it is up by 6.4% compared to its figures only a year ago. A considerable number of the growth is credited to the increase in the housing prices. Average rental properties now grow at an average of 4.2% for the last twelve months alone.

Income from rental property is steadily rising too. A rise of 1.5% was experienced this year. It should be noted that while London growth may be sluggish, elsewhere it is the opposite. There remains a strong demand for tenants. The private rented market alone lists a total of 5.6 million households.

However, landlord prospect has remained fragile as only four out of ten look at positive prospects. Compared to the figures in recent years, this is indeed considerably fewer. This has been blamed on the onslaught that landlords have been experiencing from the government. This includes the imposition of stiffer rules on wear and tear tax offsetting, the stamp duty surcharge for purchases, as well as the tax relief for the payment of mortgage interest.

According to OneSavings bank chief executive, Andy Golding, landlords these days have to swallow the bitter pill of tighter regulation as well as higher taxation. This has indeed undermined the sector offering private rentals. The tighter regulations are often considered tougher for the newbie landlords to crack and have eventually been driving many of them away. Golding stated that while there is nothing wrong with creating a sector that is more professional, there is a limitation to the amount for change that such a sector will be able to absorb. When done wrong, this can lead to supply reduction and will likely end up driving the rents up.

Being a landlord these days can be such hard work. With all the regulations imposed on being one, its complexity is significantly growing. This means that buy-to-let is really no longer one of those investments that you can do all on your own. Learn more about the recent trends in UK property by reading about Junaid Iqbal Memon online.

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