Interest rates are still extremely low; however the property market is even more difficult to predict than usual. Who truly knows how value and demand will be affected by the imminent General Election and Brexit?
Why is BTL Still Worth Considering?
The property investment market is still adjusting to new financial stipulations and landlord regulations. However - two facts keep Buy To Let as an option worthy of in-depth consideration:
1. 50% of the UK population is predicted to be living in rented accommodation by 2020.
2. The average age of a first time buyer has increased – from 24 to 35 – during the last decade.
Stephen Reade, Letting Operations Manager at HM Lettings told Property Reporter: "Becoming a landlord can be a rewarding experience and, if done correctly, provide a steady and sustainable return as an income investment, especially compared to lower savings rates and stock market swings.
“Investors are snapping up property in the hope that it will not only return a reliable yield but also a benefit from capital growth given enough time. Mortgage rates at record lows are helping buy-to-let investors make deals stack up.
“But beware low rates. One day they must rise and you need to know your investment can stand that stress test, a criterion sought by many lenders recently.
“There is also a tax rise coming, as buy-to-let mortgage interest relief is axed and replaced with a 20 per cent tax credit. Additionally, from April 2016 landlords now have to pay an extra 3% stamp duty on property purchases.
“Recent history provides an important lesson in how returns can be hit. Many buy-to-let investors who bought in the boom years before 2007 struggled as mortgage rates rose. A sizeable number were thrown a lifeline when the base rate was slashed to 0.5 per cent. Rates stuck there until this summer and then were cut again after Brexit, but they will rise again.
“Even considering the recent tax changes and potential for buy-to-let mortgage costs to rise, there are many positives. We are becoming a nation who sees renting as a flexible lifestyle choice and is far more sociably acceptable. With greater demand from tenants, rents that should rise with inflation and the long horizon for interest rate rises, mean many investors are still tempted by buy-to-let.”
BTL in North London
Jason Dyer of JTM Homes adds: “With so much to consider, it is best to talk to experts who understand the Buy To Let market as well as the characteristics of the market of your chosen location. It’s true that the BTL option is more involved than previously, however if done correctly it still offers an attractive investment opportunity.”
If you are investing in north London property – or considering it as an option, contact the Lettings team at JTM Homes. With offices in both Highgate and Archway and specialist knowledge of the north London property market, valuable advice is available without obligation.