Being a landlord can be a very rewarding experience, but 2016 seems to have been a particularly hard year for landlords, with tax and stamp duty changes to contend with.
One change is the extra 3% stamp duty surcharge, introduced on April 1st, which applies to buy-to-let investors and second home purchasers when buying a property for £40,000 or more. The 10% wear and tear allowance has also been scrapped, while from April 2017, the tax relief which landlords of residential properties receive will be limited to the basic rate of Income Tax. These measures have been introduced by the government in an attempt to curb the buy-to-let market.
What impact have stamp duty hikes had on the property market this year?
Property values in London did dip slightly in April following a rush to complete transactions in the months leading up to the 1st April, but in recent months, the buy-to-let market seems to have recovered. Investor activity remains strong as we close out the year, and we predict this trend to continue into 2017.
However, with affordability still an issue in the London market in particular, demand for rental properties is forecast to rise in the coming years. This is good new for investors, as it means they will continue to be able to make good returns on their property investment. As rental demand remains strong in London, the capital is still a great place in which to invest in property.
Stamp duty hikes have had an impact on the lettings and sale market. In fact, many market experts have concluded that stamp duty increases have had more of an impact on the property market in 2016 than even Brexit. In the sales and lettings market overall, sales have slowed while the number of letting instructions have increased.
What impact has Brexit had on the property market this year?
Brexit, and the subsequent economic uncertainty, has caused the value of the pound to drop. This, combined with low interest rates, gives more of an incentive for those living overseas to invest in the UK property market. The UK is generally viewed as a safe haven for those looking to invest in property, but with the value of the pound hitting a 30-year low, overseas investors will get more for their money.
London’s population has been growing at a fast rate. With high employment, high demand and a shortage of available housing stock, the rental market remains strong as we see out the year.
Though Brexit has meant uncertainty this year, the full impact of what Brexit means won’t be realised until next year when Article 50 is due to be triggered and the negotiations begin. One thing is clear, however, and that is the robust nature of the UK property market.
Whether you are a first-time landlord or an experienced landlord looking to expand an already-large portfolio, we can help you maximise the return on your investment, while our Guaranteed Rent Scheme will always give you peace of mind. Contact us today.