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/
No comments:
Post a Comment