It feels to me like we are going through a period of re-adjustment. The landlords who invested when we carried out our first buy to let seminars in 1998 were lucky enough to buy at a time when you could easily achieve a 10% return on your investment. Some of those landlords are the very ones who are selling their rentals now to release the equity for the next chapter in life.
A buy to let investment has a job to do - It may be part of a pension plan or to provide for children as they leave home. The aim of many of our landlords was for the rent to pay off the borrowing required to purchase the property in the first place. Fast forward 15 - 20 years and they are in the position of having an income giving asset to utilise to supplement a pension or to sell and release funds.
Any property owner looking to sell should get the right advice when it comes to tax planning. Selling property can create a tax liability for the owner and effectively managing a property portfolio along with other investments can help you to reduce the levels of Tax you could pay.
But what does these landlords selling mean for the Melton Mowbray property market?
There are still many people looking to invest in property. The returns may not be what we saw back in 1998 but Melton Mowbray property has proven to be resilient to recession; our tenants are predominantly families, so there will always be demand for good quality rental property. In my opinion in the long term the demand from tenants will continue to outstrip supply of property and we will continue to see rents rise improving the returns for investors.
If you purchase a property to let you must do your research - invest in the right property to minimise void periods and put money aside to keep the property in good order and well maintained.
Consider your exit strategy and any future tax implications. Are you purchasing the property as Joint Tenants or Tenants in Common with specified percentage shares as this will greatly impact the inheritance position. From today until 2020 there will be key buy to let changes that will affect thousands of landlords across the UK and potentially reduce net income.
If you get the right advice then you can maximise the returns from a property portfolio. Please give me a call if you would like to discuss property investment or seek advice about tax liabilities.
Charlotte Baker 01664 569700