To round off the year, here is our review of what happened in the UK buy to let market in 2016.
For landlords and buy to let investors it has certainly been an eventful year.
- First came the capping of mortgage interest tax relief and the imposition of an additional 3% stamp duty on second homes and buy to let properties.
- Then on June 23rd the unexpected result of the EU referendum leading inexorably to Brexit.
- Finally in the chancellors autumn statement, subject to further consultation, the abolition of fees charged to tenants by letting agencies for setting up a new tenancy.
These changes have certainly had an impact on landlords and buy to let investors but what should they be doing about it?
Landlords with a larger number of properties should consider incorporation as a company to mitigate the changes in tax and stamp duty. However this will probably not be advantageous for a typical landlord with, say, 3 properties or less.
The prospect of Brexit has had an impact on the rate of growth in house prices. In 2016 house prices increased by around 3 – 4 % but there were big regional variations. This highest increases were in the North of England and Wales while house prices fell in inner London.
Rents for new tenancies increased by an average of around 3.4% in 2016 with the largest increases in northern cities such as Manchester and Liverpool.
Finally, while the abolition of fees for new tenancies sounds like good news for tenants letting agents cannot avoid the cost of searches etc and it seems inevitable that this will be passed on to tenants in the form of higher rents.
The best news for investors in 2016 was the continuation of low interest rates. Following the EU referendum the Bank of England reduced the base rate to the historic low 0.25%. As a result some incredibly good deals are available for buy to let mortgages with many investors opting for a five year fix in anticipation of an increase in interest rates in the medium term.
As ever, before you make any new investment in property, research the local market intensively.
Investors in Bristol can be confident of better than average returns, due to the strength of the local economy.
The next edition of our market overview, in January, will look forward to 2017.
And of course, we will all be discussing the latest position on the property market across the UK and in Bristol at our next PIM which will be in the new year – on 26 January 2017 at Holiday Inn, Bristol City Centre, 6-9 pm.
We hope you will join us then.
For more info and to reserve your place Click Below