There are mixed messages coming from the industry press about Buy-to-Let: on the one hand the figures are showing a surge in rental property sales in the first quarter of 2016, more landlord investment that there’s been for some time, on the other, reports are coming out that landlords are losing confidence in the profitability of renting.
A new report based on a study by PropertyLetByUs.com reveals that just one in five landlords believe there is still money to be made in the buy-to-let market, following the raft of new tax rules that have hit landlords hard over the last 12 months.
The PropertyLetByUs.com research shows that over half of the landlords who purchased buy-to-let property in the last three months did so to beat the Chancellor’s stamp duty reforms and that 43% of landlords are considering putting their properties into a limited company to beat the tax rises.
However, only 5% of landlords have sold buy-to-let properties because of the increased tax burden and just 6% plan to reduce their property portfolio and invest their capital in stocks and shares.
Despite all the rhetoric about death of buy-to-let profits, only one in six landlords is seeing a reduction in their profits. Jane Morris, Managing Director of PropertyLetByUs.com comments:
“Our research shows that landlords are fairly upbeat about the BTL market and many of them appear to have strategies in place to off-set the tax hikes. Many landlords are opting for incorporation, at the same time as raising rents.
“The latest figures from the HomeLet Rental Index reveal that between January-March 2016, rent on new tenancies signed on rental property outside of London were, on average, 4.9% than in the same period of last year.
“The figure in Greater London was 7.7% higher than a year ago, although Scotland wasn’t far behind with an increase of 7.3% in the same period, just ahead of the East Midlands with 6.8%.
“The surge in landlords investing in buy-to-let property in the first quarter of 2016, has created a bubble of new rental properties in some parts of the UK. However, in the longer term, it is likely that the tax changes will limit the supply of rental property and discourage potential new landlords from investing in the buy-to-let market. The good news is that tenant demand will continue to rise, as unaffordable house prices push home owning out of reach for many people.”
Source: PropertyLetByUs.com research amongst 500 landlords, April 2016.