I think most of you will give a resounding yes to this
question!
Substantial property value increases have given good capital
growth to most landlords, by tens of thousands of pounds in many cases.
Improved income
through increased rents and reduced void periods has benefitted most.
Further, many landlords have been able to reduce costs by re
mortgaging and taking advantage of the many low fixed rates available in the
mortgage market, protecting their cost base for the future against an impending
rate rise.
Some landlords have taken advantage of the above positive
factors and added to their portfolio through 2015.
However there are a few clouds on the horizon. Extra Stamp
Duty for second home purchases, changes to tax relief for buy to let landlords,
extra costs for landlords to meet the raft of new and pending legislation.
Many of these factors are not news… we are all aware and
they have been much reported in the media. But what we are not sure of is the
impact they will have on the market.
Miles Shipside Rightmove Director ‘this is December’s best
post-financial crash performance, signalling another round of price rises in
2016. Despite the shortage of suitable stock in many parts of the market,
demand for housing is on the up. Although the average price of property coming
to the market is already up by a hefty 7.4% compared to a year ago, Rightmove
forecasts that prices will reach and breach new records next year’.
Rightmove’s 2016 forecast is for new seller prices to rise
by 6%.
Will there be an assault on the market from landlords trying
to buy before the new Stamp Duty regime applies in April?
Will first time buyers hold back from buying until after
April in the hope prices will reduce once the new Stamp Duty puts landlords at
a financial disadvantage and the competition for stock is reduced?
Will there be a rush of landlords through 2016 trying to
sell and reduce their gearing in light of pending tax changes? Will this new
stock be in sufficient volume to drive down prices as supply outstrips demand?
Will America put up interest rates and will we follow? Or
will Janet Yellen back off at the last minute as previously?
I imagine we each have our own views. What we do about it
will depend on our own prevailing circumstances and financial situation…I would
love to hear from you with your opinions.
Some landlords I have spoken to recently have some
interesting thoughts. One landlord intends to invest money into his existing
portfolio by moving kitchens into the lounge and where possible turn the kitchen
in to a bedroom making one bedroom units into two bedroom units and enhancing
the rent (reflecting many of the new builds/conversions that have a similar
layout).
Another is remortgaging his whole portfolio to fixed rate schemes
with a view to driving his expenses down to offset any increase in his tax bill.
Interestingly I have not spoken to any landlord that intends
to sell his portfolio, after all most of us bought a buy to let for the long
haul…either to help our retirement income in years to come or in many cases to
help our children when the time comes.
Whatever your view as always it is essential to buy right.
There are very few bargains to be had but buying a property that will let well and
have a good chance of sensible value growth is essential. There are many new
flats on the market and many more waiting to come to market, all at high prices.
Whilst these will let well I struggle to see the option for capital growth
being as good as a freehold house where supply is much more limited.
As always the Aylesbury Property Blog will keep you touch
with market trends, http://theaylesburypropertyblog.blogspot.co.uk/
or pop in to see me in my Temple Street office
when you are passing. Enjoy the festive season.
Please feel free to comment below.
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