George Osborne has decided now is the time to change taxation for buy to let property, many pundits are predicting the end of buy to let as we know it. However, it is still possible to make a reasonable, profitable and safe return on property with these changes.
You need to study the market, take advice and opinions from many people and then decide what the best course of action should be… remember, tenants will always want a roof over their head and I don’t see the HM Government building the millions of houses required to house them?
Looking specifically at the Rutland and Melton Parliamentary Constituency, twenty years ago, 24,218 households (meaning 68.37% of property) was owned and only 2,513 households were privately rented (meaning 7.09% of property was rented out by private landlords). Roll the clocks on twenty years and 30,376 of properties in the Constituency are home-owners (72.52% being owner occupied) and the jump in private renting has high, as 5,968 properties are now privately rented proportionally 14.24%). (NB Neighbouring Constituencies show similar changes as well).
Who would have predicted in 1995 the private rental sector in
Melton Mowbray would have grown by 100.84% in the proceeding 20 years?
Also, if you had asked someone in 1995 to predict what would happen to property values over the proceeding 20 years (ie between 1995 and 2015), they might have predicted similar growth to the growth experienced over the previous 20 years (ie between 1975 and 1995), which was a very impressive 351.55%. Yes, property values in Melton Mowbray have increased over the last 20 years (between 1995 and 2015), but by a more modest 163.29% (and most of that can be attributed to house price growth between 2000 and 2006.)
The property market is constantly changing and buy to let for too long has been heavily dependent solely on house price growth, where yield has been almost forgotten. I see the changes in tax and landlord and tenant law in a different perspective to the doom-mongers and see it as bringing many opportunities.
You might need to change your buy to let benchmarks, your approach to financing or even consider places other than Melton Mowbray in which to invest your money, but this will shine a light on investing in properties with healthier yields and create more realistic long term buy to let opportunities, instead of short term growth bets and wagers.
The advice I give to my landlords is these changes will make some landlords panic, meaning competition for decent Melton Mowbray buy to let bargains will reduce as fear of change kicks in and amateur investors leave the market. These opportunities will provide a more stable platform for knowledgeable and wise Melton Mowbray buy to let landlords to thrive in.If you want to learn more about the Melton Mowbray Property Market, feel free to pop in for a coffee at our office for a chat with me at 27 Burton Street.