The growth in buy to let has been undeniable. BTL has made a lot of sense for investors with cash sitting in bank and building society accounts seeing their money devalue as inflation has been very low.
The growth in buy to let has been undeniable and this has helped drive a rising house market. Now housing transactions are down, is this an issue?
BTL has made a lot of sense for investors with cash sitting in bank and building society accounts seeing their money devalue as inflation has been very low. At the moment it sits at around 0.4% but has been at an average of around 2.5% over the last few years.
Inflation and Base Rate Crossover
So only now are we seeing inflation in line with the base rate. I see a consequence of this being to reduce incentive to invest if the low inflation rate continues for a period of time. After all you are losing less by not doing anything with the money than it just sitting in the bank account.
Buy To Let as Retirement Income
Buy to let has made sense as an investment that holds the promise of both future income and capital growth which helps to supplement income or cover mortgage costs.
Many have invested for the long term to support pension income. Personally I think buy to let investment makes a good additional income source but investors should not ignore regular pensions. You are at more risk if say a single tenant who you are heavily reliant on does not pay rather than if you have a small portfolio of property or balanced across different investment types.
Stamp Duty Changes
The 1st April Stamp Duty Land Tax surcharge of 3% for landlords expected to trigger a rise in property transactions in January (which is the latest figures that Land Registry have released). So what happened?
Well despite an expected rise figures fell back this year compared to last..
Jan 2015 and 2016 Prices and Vol
As you see from the table. Hillingdon volumes in January this year were down 5% on last year which is still better than how Greater London performed.
So volumes are currently low, but I would conclude that it's far from the end of the world! The stamp duty land tax 3% surcharge was announced back in November 2015 and it can take a while to buy a property. A couple of months is quick to complete a transaction and three months is quite normal. This means that we are really going to see those volumes from the SDLT come over in Feb and March figures.
Until then I don't think the low volumes are quite as bad as some stories in the media might have us believe!
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