The number of buy-to-let landlords acquiring new properties continues to tumble as recent tax changes bite, but property remains a viable and safe investment model, according to Paul Smith, CEO of haart estate agents.
Many people believe that the attraction of buy-to-let has faded following the phasing out of mortgage interest relief and the introduction of the 3% stamp duty surcharge for those buying additional homes, including rental properties. But Smith is confident that property remains a good investment, and believes that many buy-to-let landlords share his view, as reflected by the latest mortgage data.
Despite the slowdown in new buy-to-let mortgage approvals in July, UK Finance’s mortgage lending data, released yesterday, shows that there were 14,700 new buy-to-let remortgages completed in the month, some 7.3% more than in the corresponding month last year.
The rise in new buy-to-let remortgages suggests that appetite for buy-to-let is still strong despite market pressures, according to Smith.
He said: “It is fantastic to see that buy-to-let investors have not been deterred by the recent tax changes and are continuing to see the worth in property investment.”
Smith is advising buy-to-let landlords to head north to invest in properties for the best chance of achieving high annual rental yields.
He added: “Although the London bubble has burst, UK cities such as Nottingham, Leicester and Manchester are experiencing yields as high as 7% - far more favourable than cash savings, and a much safer bet than the current stock market.”
The estate agent also pointed out that after eight months of considerable growth, the first-time buyer market is beginning to slow down, as rising rents and the unknown future of Help to Buy “present significant challenges for aspiring homeowners”, which is likely to place upward pressure on rental demand moving forward.