Who’s leaving and who’s staying? BTL in 2018
By Will Leyland, 06 February 2018
You’d be forgiven, having read coverage from some sections, for presuming that the ceiling was caving in on buy-to-let amidst government interference. Tax changes, alternations to legislation and tweaks to the law have meant that incomes have been put under pressure in the sector, or alternatively that more attention has been needed to be paid to the structure of portfolios.
Indeed it has been the case that many have decided that, rather than go through the hassle of seeking advice about inherited property, they’d actually prefer to just sell up altogether. That’s understandable, of course, given that many in buy-to-let were in the sector due to inheritance or, for example, due to moving in with partners.
There were many decrying the moves as the end of buy-to-let as we know it, whilst the sensible among us recognised that whilst the government’s changes were ham-fisted and a little aggressive there was no reason to panic, as serious landlords and investors looked at ways to offset the changes.
The result of those changes that many expected seems to have now come to be, as many outlets are now reporting that activity in buy-to-let is increasing (if slower than before), and that research is tending to find that those who have stuck around are the serious investors who are now reaping the rewards.
Nationwide has published its findings on the latest English Housing Survey from the Ministry of Housing, Communities & Local Government, stating that activity has increased. One of the key findings was that the number of privately rented households in England has reached a record high of 4.7m.
In terms of numbers, that represents an increase of 75% over just 10 years, and represents 20% of all the households in England, up from 13% in 2007.
Commenting on the building society’s findings, Nationwide chief economist, Robert Gardner pointed out that there has been a large and speedy increase in the number of 35 to 44 year olds renting privately, having increased by 126% over ten years as well as a sharp increase in 45 to 54 year olds. This represents an interesting shift in demographic as pre-2008 the vast majority of people renting were under 30 years old.
Not only this, Gardner also notes that the market has experienced steady growth despite a decrease in mortgage lending for buy-to-let, which he indicates could be due to landlords making cash purchases as they can no longer claim tax relief on mortgage interest.
Meanwhile, research by Upad has revealed that landlords have continued to register in ever-higher numbers for online services and high street estate agent services, suggesting that professionals are continuing to invest in the market.
It was noted that landlord registration increased 20% year-on-year, whilst registrations by those who had 5 or more properties increased by 56%.
This certainly seems to re-enforce the view that, despite changes to tax and legislation, serious landlords are still confident in the market and seeking to expand their portfolios.
Certainly, it seems to be the case that whilst part time landlords with little or no knowledge of the sector are leaving altogether as they struggle to get to grips with the changes.
This leaves a fertile and booming market for the professionals to occupy with big rewards for those who have persevered. With the property market becoming ever-more focused on privately rented property it would seem like madness to not look to profit from that.
Rental growth, yields and capital gains are all growing whilst demand continues to increase and supply stays largely well behind where it needs to be. With all of that in mind, this could be a big year for the professional landlord, with the right help.
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