Any landlord in the UK would undoubtedly say that 2015 has been a pretty tumultuous year for the market, a year where both positives and negatives can be taken. On the one hand, it has been a year of extremely strong growth in the sector, with measurements and reports showing that there has been unprecedented levels of investment. On the other hand, however, the Bank of England has placed the sector under greater scrutiny as they have warned that it could become a threat to the UK economy. All these changes, both negative and positive, mean that current portfolios need to be consolidated and profits maximised via the adoption of efficient methods of management. Property management software can provide these solutions for minimal costs to landlords and property managers.
2015 has been the year where the buy-to-let sector has become overtly politicised – transforming the sector from sector-specific news and magazine articles into a sector which has become widely reported within mass media, government policy, and financial studies. The run up to the election began the attack on the buy-to-let market, as the housing crisis became a pertinent issue for voters and politicians respectively.
It was the mobilisation of popular sentiment against the sector that played an influence on the Tory summer budget, indicating the first implementation of policies on the sector. Fuelled by the electoral rhetoric which focused on the housing crisis, Osborne announced cuts to tax reliefs for buy-to-let landlords from 40% to 20% to be phased in from April 2017. This means a reduction in profits for all landlords and some subsequent rental price rises as the costs get passed down to the tenants, at least by some landlords.
George Osborne then surprised many property investors by maintaining the assault on the sector with increases to stamp duty taxes in his autumn statement. Investors buying a second home will soon face additional duties on their purchases, with surcharges increasing by 3% according to each price bracket. This will significantly increase the purchasing costs of property for property investors seeking to expand their portfolio.
The assault on the sector has not been unique to government policy – the Bank of England have followed suit in warning that the sector could be dangerous to the economy, with important repercussions throughout the financial markets. Mortgages for buy-to-let are becoming much stricter, with banks now required to hold more capital for riskier loans. For landlords, that means that they may now have to meet 70% of the loan with their own capital, instead of the previous 35%. This is only going to make the market less liquid, so portfolio growth will be reduced for all landlords.
Indeed, since both the government and the financial markets are trying to intervene in the market to get it to “cooldown” rather than crash, Arthur believes that it is a convenient time to consolidate property portfolios for investors. Expansion is becoming more costly and more difficult, so current portfolios should be made as efficient as possible. Property management software packages, such as Arthur, can enable property managers and landlords to reduce their workload by allowing all user groups to interact on a mobile platform. Moreover, integration with accounting software and financial packages makes the rental payment process far more streamlined.
Arthur can provide certain solutions for landlords and property managers in the current climate. Property investments are the same as any business, and as such property investors must remember that they need to remain competitive and innovative. Arthur can provide these advantages and allow property investors to make their portfolio much easier to run, control, and understand. Once the workload is minimised and the portfolio management is optimised, then investors can concentrate on expansion in a tougher market.
Keep Calm and Carry Arthur