When you buy a house to live in your priority is to turn it into a home, not a profit. It’s certainly important and you would hope that the property would increase or at least hold its market value (capital appreciation).
Buying a house as a Buy-to-Let investment is a totally different beast altogether and will fundamentally be a decision driven by money, whether that be for a monthly yield or appreciation of the property over time. Here we take a look at a few points that may affect buy-to-let in 2018 and onwards and if there is anyway to predict the market.
Where do we start with Brexit? It has been the biggest political event in history in recent memory. The truth is that the results of Brexit and its future implications are nowhere near as clear as many would like it to be. Brexit is making people more conscious of their money due to an unprecedented level of uncertainty. The Financial Times reports that UK housing transactions dropped by 9% from 2015 to 2016 in London (Financial Times, January 2018) but London hasn’t performed like the rest of the UK property market for a very long time. This highlights a need to be selective and careful in regards to the information you are using to make a decision on your Buy-to-Let future.
Tax Relief Changes
Under new rules being phased in over the next few years, Landlords will progressively lose valuable tax relief on their Buy-to-Let mortgage costs. This legislation alone will change the Buy-to-Let sector, but it’s important to understand if it will affect you as an individual Landlord and to what extent. Here is an excellent video by Which, explained in simple terms. By 2020 we will know exactly how much of an impact the Buy-to-Let mortgage tax relief changes will have on Landlords, tenants and the economy at large.
Predict The Market
In short, you cannot predict what will happen in the property market today, tomorrow, or any day. Any form of prediction becomes even harder when you consider different Buy-to-Let strategies. Buying a house in the hope of it increasing in value is a completely different strategy to collecting monthly rental yield on a property. We talk a lot in all of our blogs about seeking and gaining the right knowledge and Buy-to-Let is a perfect example. Speaking to a team of people who have knowledge of the market sector and informed decision making, at a time of Brexit and tax changes, just seems like the smart thing to do. Knowledge is power, but only if you speak to the right people in the first place.
To discuss our mortgage broking services, call us on 01302 244 977 and ask for Mark Gilruth.
Publish date: 1st November 2018