What are the Advantages and Disadvantages of a buy-to-let?
There is no denying that the buy-to-let is not as straightforward an option as it used to be. With an ever shifting property market, less favourable tax conditions and increased stamp duty there's a lot to consider before taking the plunge.
Thinking about becoming a landlord for the first time can be a daunting prospect. We have helped many landlords take the first steps, and it has never been more important to do your homework and get professional advice.
Here are some of the fors and againsts that are worth considering before making that investment.
Affordable locations are more inclined to growth
There may still be opportunities to profit from property, if bought at the right price and in the right area. In our blog post from last month we compared the four towns of Amber Valley to see how their growth compared. Visit the blog for more information.
Uncertainty in politics can lead to a hesitant and uncertain housing market
Like any type of investment economic and political instability create uncertainties in both the property and finance markets.
The Property Rental Market is predicted to continue growing
There’s unlikely to be a shortage of people looking for decent, well maintained private rented property in the medium to long term letting market. We have also found that tenants are staying in homes for longer periods than had previously been predicted.
Extra stamp duty is now payable on additional homes
A question that our new landlords frequently raise is how will the extra cost of stamp duty affect their investment since it was introduced in April 2016.
Unlike regular stamp duty, the extra 3% is charged as a flat rate on the entire cost of the property.
HMRC, mortgage lenders AND the Government appear to be making it more difficult and less profitable to invest in buy to let.
From April this year, the relief available on mortgage interest started to be capped at the basic rate of 20%. By April 2020 all landlords in the private rented sector will be affected.
Property is a long-term investment that can really pay dividends
It is a fact that house prices fluctuate and vary by region. However, the last 12 years have shown that property prices have continued to increase, albeit at different rates, but generally with an upward trend. An investor should always buy a property with the resale value in mind, and not just consider the rental income. It is worthwhile to have a plan of how long you are going to keep that property depending on your personal circumstances.