With the tax changes to mortgage interest relief looming as the biggest single issue affecting buy to let landlords in the UK, many have concerns about the future of their business.
But, concludes Property Wire’s panel debate on the future of buy to let, “they should not worry about it, instead they should be “taking it as part of the cost of running a business.”
Panellists stressed the importance of treating buy to let as a business, and that it needs to be run as a business. Landlords should realise that “they are in it to make money and therefore they need to make sure they are on top of their costs.”
One suggestion aired was that London landlords should look outside of the capital if they are expanding their portfolios in order to improve their yields, by buying lower priced properties. But it was pointed out that “there is always the consideration that being near the property you let can be beneficial in terms of building a relationship with tenants and keeping an eye on the property.”
However, it was acknowledged that fining property at a lower price not only increases yields, over the long term capital growth can be higher and the initial saving on stamp duty may be substantial.
Tony Gimple of Less Tax for Landlords, who specialises on advising landlords on how to structure their portfolios to maximise tax efficiency, said he believes that “landlords should concentrate on yields foremost rather than capital growth and let the economics speak for themselves.” He said he is “a firm believer that tax changes just need to be accepted as part of running a business,” and he does not think the raft of recent changes will “put landlords off from investing in the future.”
Panel member and National Landlords Association (NLA) representative Richard Blanco, himself a landlord with several properties in London, is not in favour of investing in other cities even although he described the London rental market as “dysfunctional”.
Paul Mahoney, founder and managing director of Nova Financial, speaking on the issue of rent increases because of the recent changes, said “it is the market that will determine the rent not what a landlords think they can charge.”
Mr Mahoney cited Manchester, Birmingham and Liverpool as being good places to invest, locations which make financial sense, pointing out that yields are important in the current market.
The panel were negative on the option of short term Airbnb lettings, especially in London where there is a 90 day limit on short term lettings, and they thought the practice could conflict with lease, insurance and mortgage conditions.
Andy-Wynne Jones, senior underwriting manager at Simple Landlords Insurance, suggested that money could be saved by landlords increasing their policy excess levels, accepting a higher level of risk but reducing short term costs.
The panel thought it was too early to say how Brexit would affect the UK housing market and buy to let in particular but their overwhelming conclusion was that landlords need to “take change in their stride” and remember that they are “running a business and adopt the necessary strategies to make it a successful one.”
Landlords should dismiss tax worries and carry on… https://t.co/rTnwHZFwRU
— LandlordZONE (@LandlordZONE) March 28, 2017