Several changes to regulations hitting the buy-to-let market have seen everyone from potential investors to experienced landlords asking whether property investments are still worthwhile.
With the potential returns on property still far greater than most savings accounts, the majority of experts seem to believe that putting money into property is still worth your while.
Despite the growing list of regulations, demand across the UK has gone up, as has the average rent. It is however, more important than ever to get a plan together before taking the plunge…
Understanding economic trends
All investment markets work in cycles, as does the economy, and the property market is no different. The most seasoned property investors attempt to evolve their strategy through the economic trend cycle.
At different points during the cycle, there will be investment opportunities that could lead to decent capital gains, whilst at other times it’s best to invest in a buy-to-let property.
Knowing the figures
Last year saw the government cracking down on tax relief. Changes to the tax system means restrictions were introduced to mortgage interest tax relief.
Repair costs are now also a lot harder to offset against tax. The government also announced that an additional 3% surcharge would be introduced on stamp duty for anyone looking to purchase a buy-to-let investment.
Once you’ve taken all those figures into consideration, you’ll also need to make sure that you’ve allowed for any insurance costs, your mortgage repayment, letting agent fees and an allocation for voids in your plan.
Despite the changes to buy-to-let regulations, a year on landlords still have reasons to be optimistic. While the regulations may have tightened, borrowing is on the up, with August last year seeing the highest levels of mortgage lending since the financial crash in 2008.
Although confidence did take a significant hit post Brexit, the Royal Institute of Chartered Surveyors reported that it’s rising again, they also predicted house prices would see a steady 3% increase over the coming year.
So, although the recent changes may force potential property investors to reassess their finances and to take another look at how they can gain the most value over the long-term, the property market is still proving fruitful for some.