What’s Happening In The UK’s Buy to Let Market
A Steady Decline in the Best Known Property Investment
For the first time in 18 years, there has been a drop in the number of homes available to rent. Official figures confirm that Landlords are selling around 3,800 properties a month since the introduction of tax reforms in the Buy to Let market sector.
Landlord’s profits have taken a significant hit with such things as limited mortgage interest tax relief introduced in April 2017 and the introduction of a 3% stamp duty surcharge in April 2016. Essentially, it is much more expensive to both buy and run Buy to Let properties.
(source: Ministry of Housing, Communities and Local Government)
With the Buy to Let market in these dire straits, many landlords have tried to combat this by rising their rents, but this too is proving difficult. In the 12 months leading up to July 2018, UK rents (excluding London) increased by only 1.18%, the slowest annual rental increase in five years.
Not only is being a landlord significantly harder these days, becoming a landlord is about to get much harder too affecting the Buy to Let market even further. Many local councils have now introduced new licensing. Requirements vary from area to area but will generally include proving you are a ‘fit and proper person’, meeting tenant safety regulations and, in some cases, signing up to a charter.
In July 2018, the government announced new plans to introduce compulsory three-year contracts for most residential lets in England. A break clause within the lease would allow tenants to end it earlier if they choose to. These plans are still under discussion but if brought in, they will significantly impact the flexibility of landlords and therefore the Buy to Let market in the UK.
So, with the way the property market is now with rental yields not what they once were, Brexit on the horizon, investors are always on the lookout for alternative investments. For us here at Wakeley, we have been fortunate enough to reap the benefit with large numbers of Buy to Let landlords moving across to take advantage of our Life Tenancy Investments. Exempt from the 3% surcharge and requiring much lower maintenance, landlords see the appeal.