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TODAY'S OTHER NEWS

Government needs to restore confidence in rental investment market

New Prime Minister Theresa May will undoubtedly have a number of things to do on her to-do list, but among the biggest immediate challenges is the need to restore confidence among buy-to-let landlords post EU referendum, according to letting agents Belvoir.

Pre-referendum uncertainty, combined with the former Chancellor George Osborne’s mortgage tax relief cuts, increased stamp duty for buy-to-let investors, stringent buy-to-let mortgage requirements and a lack of commitment to new affordable housing have collectively had an adverse impact on the rental investment market across many parts of the country, as reflected by the recent fall in buy-to-let property transactions.

Now that the referendum result has been decided, Belvoir report that there is a ‘back to business’ mentality among many landlords, reflecting the fact that property remains a ‘very attractive’ long-term investment opportunity, particularly for those with cash to invest.

However, in some areas continued uncertainty over the future of EU nationals in the UK is having a negative impact, according to Belvoir managing director, Dorian Gonsalves.

For example, over in Boston in the East Midlands, which was reported as being the most pro-Brexit town in the UK with 75% of the population voting to leave, thousands of EU workers remain anxious about their immigration status.

“We hope that the government will act quickly to resolve this uncertainty and reassure EU citizens about their future in the UK. This will also help to reassure those overseas landlords who are also expressing concern,” said Gonsalves.

Emma Falco, co-owner of Belvoir Peterborough, just 30 miles from Boston, admits that Brexit has certainly been a ‘hot topic’ for landlords and tenants, but whilst there is a lot of conversation surrounding it, it doesn’t seem to have deterred serious investors.

Falco said: “I think many still have the 2008 crash in their minds and are hopeful that they may be able to pick up a property bargain in the coming months if the market drops, as predicted. Now that property prices have risen back to their 2007 values many investors wish they’d had the confidence to buy when prices plummeted in 2008.

“In my opinion, investors should still consider property as one of the best places to put their money. For example in Peterborough, an average rental property would generate a landlord a 9% return on the capital they employ. Investors will not get anywhere close to this by leaving their money in the bank. Regardless of what happens to property prices in the short term, the demand from tenants is ever growing.”

  • G romit

    This has nothing to with Brexit. Rent are set to skyrocket as the Section 24, Finance Act 2015 starts to kick-in; as it is this that will impact rent not the SDLT or Wear & Tear tax changes (although these will have a second order effect).

    The new Government needs to wake up and smell the coffee, as between 1-2 million Tenants and their families are going to be affected, with rises of 25-30% to pay the extra tax (none of which will go into the pocket of the Landlord). Tenants who cannot afford this will be evicted, and have to move into lower cost accommodation. Those at the bottom of the housing ladder will fall back on their Local Council causing homelessness to escalate markedly. Where rents cannot be increased Landlords will have to sell up reducing the supply of rented properties, and in turn the reduced supply will cause rents to rise. Just look what happened in Ireland when the Irish Government tried this between 1999-2002.

    The new Chancellor needs to wake up to this and repeal this tax change before the impending train crash that the previous Chancellor, George Osborne, who hasn't a scoobydoo about economic or the housing market has set in motion.

  • icon

    Osbourne has effectively added 30% vat to rents.
    Maybe he felt that he had no choice after the House of Lords blocked £4.5billion in benefit cuts and then another £billion of disabled benefit cuts?
    If they can't cut spending , they have to either raise taxes, or borrowing.

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