Is there a crisis in the Solihull Property Market..

I don’t know about you, but if you watch Sky News every waking hour or read the newspapers, it appears we seem to lurch from one crisis to another. Another week, another crisis averted. It was only last summer the soothsayers were predicting the end of the world over the supposed house price bubble that many believed was developing in the South. Property prices were rising at 20%+ per annum in London, however the property market in the Capital started to show a controlled slowdown and a cooling in activity with growth easing to a more realistic 8% / 9% per annum. Interestingly, there was no panic when modest price drops were seen in some of London’s highest priced suburbs.

However, this month’s crisis is the buy to let boom and as always George Osborne likes to be topical. In the emergency budget, Mr Osborne declared that from 2017, he will start to scale back the tax relief that those landlords, on high income tax rate with a mortgage have benefited from. The Daily Mail ran headlines stating it was the end of the private landlord; predicting many will give up on buy to let altogether and we will be inundated with rental properties up for sale as landlords feel the squeeze.

Even Mr Carney, the Governor of the Bank of England, recently cautioned that the buy to let sector could destabilise the whole UK property market. He was concerned landlords who bought with high loan to value mortgages will panic if there is a property crash because of the treat of negative equity, sell cheaply and which will result in large scale house price falls.

End of the world then? Not so..But next week … that’s another story!  Before we all go and live like hermits in the Scottish highlands, let me explain to you my perspective on the whole subject. As I mentioned a few weeks ago, two thirds of buy to let properties bought in the last eight years have been bought mortgage free – so they won’t be affected by the Chancellors’ tax changes and if the right advice is taken from an accountant with sound tax experience there is no need to panic.  Also something I feel is often overlooked but very important, is the fact that landlords could only normally borrow up to 75% of the value of the rental property.  In the last property crash of 2008, property values dropped by the not so insignificant figure of 17.84% in Solihull. However, even then, when we had the credit crunch and the world’s banking sector was on the brink, no landlord would have been in negative equity in Solihull.

I believe we have a case of ‘bad news sells newspapers’ and I believe that buy to let, and the property market as a whole, will carry on relatively intact. It is true, reducing tax relief will affect landlords who pay the higher rate of income tax and this may slightly diminish buy to let as an investment vehicle, but it is a staged policy and taking the right advice will mean reducing the impact; I highly doubt it will push people to sell.  Many landlords have been lazy with their investments, buying with their heart, not their head. Nobody would ever dream of investing in the stock market without doing their homework and talking to other people in the know. If you want to make money in the Solihull property market as a buy to let landlord, it’s all about having the right property and as you grow, the right portfolio mix to offer a balanced investment that will give you both yield and capital growth.

The Solihull buy to let market still offers good investment opportunities to new and old landlords alike. Those who have bought in the last 12 to 18 months have reaped the benefit from buying in Solihull, because the town offered a combination of reasonable house prices with subsequently increasing rents.  Property values have risen by 8.17% in the last 18 months in Solihull, whilst looking at rents, in Q2 2015, average rental values for new tenancies were 4.6% higher than Q2 2014 and they rose by 4.2% between Q2 2013 and Q2 2014.

I cannot stress enough the importance of doing your homework. One source of information and advice is the Solihull Property Blog where I have similar articles to this about the Solihull property market and what I consider to be the best buy to let deals around at anyone time in the City, irrespective of which agent it is on the market with. If you haven’t visited and you are interested in the local property market in Solihull .. you are missing out! .. http://solihullpropertyblog.blogspot.co.uk/