The phasing out of mortgage interest relief and tougher mortgage lending conditions contributed to what was a rather difficult 2017 for buy-to-let landlords, and yet for many people buy-to-let continues to look an attractive income investment, according to a leading property auctioneer.
The 3% stamp duty surcharge for those buying additional properties, the clampdown on mortgage interest relief and more stringent lending conditions have made buy-to-let a less attractive proposition for many landlords.
“Government policy has offered investors little comfort, with the gradual phasing out of tax advantages, all on top of 2016’s 3% second-home stamp duty increase,” said Gary Murphy, partner and auctioneer at Allsop.
Murphy believes that the political and economic uncertainty, as well as the tightening of mortgage lending criteria, are forcing many landlords to “review their portfolios”, insisting that those who have not will find this task “at the top of their New Year to do lists”.
“New lending stress tests to be introduced from January will impact all private landlords, regardless of portfolio size. Both professional and accidental landlords will be affected,” he continued.
Despite this, Murphy insists that there is “still appetite in the market” for fresh buy-to-let property acquisitions.
He advised buy-to-let landlords looking to grow or adjust their portfolios in response to tax changes to focus on growth areas and opportunities for value enhancement.
He added: “London’s suburbs, where prices are considered relatively affordable and housing demand remains robust, can still offer investor value.
“Regional cities are increasingly regarded as the smart buy in 2018 for capital growth and strong returns.”
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The "Restriction on Mortgage Interest Relief" hasn't really begun to bite, and sink into the minds of Landlords yet. For those that have; they are exiting the market or changing the structure of their business to mitigate the effects. At the moment new purchases are being made via ltd co's which are currently unaffected by the MIR changes.
waste of time having cash in the bank, investment into property seems to be the only way to get a decent return, but to borrow heavily to purchase property investment seems like a mugs game.
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