If you browse the BBC news website or heaven forbid read the newspapers, it seems we, as part of the global economy are always on the precipice of one monetary meltdown or other. A week passes and we avoid a financial crisis by the skin of our teeth
If you browse the BBC news website or heaven forbid read the newspapers, it seems we, as part of the global economy are always on the precipice of one monetary meltdown or other. A week passes and we avoid a financial crisis by the skin of our teeth. It was only last June or July when financial analysts were predicting the end of the world over the house price bubble many believed was developing particularly in the South East and London (and some still are). Property prices were rising at over 20% per year in London, only for things to ease back as the property market in the area capital started to slow and price growth lessened to a more reasonable 8% to 9% per year. Interestingly, and let’s be honest there wasn’t a panic when some modest price drops were seen in some of the London’s highest priced suburbs like Chelsea and Westminster.
Pressure from the Chancellor
However, one of this month’s crisis is buy-to-let boom and George Osborne in the recent budget, declared he will start to scale back, from 2017, the tax relief those high income tax rate landlords with a mortgage have benefited from. Of course cue The Daily Mail to run headlines stating it was the end of the private landlord, predicting many landlords will now give up on buy-to-let altogether and we will be inundated with rental properties up for sale as landlords feel squeezed from the market.
Pressure from the Bank of England
Mark Carney, Governor of the Bank of England cautioned the buy-to-let property market could destabilise the whole UK property market, as he was concerned landlords who bought with a high loan to value mortgages, could be worried into selling if there is property crash, they would panic because of negative equity, sell cheaply, which would worsen house price falls.
So, before we all go and live in our silos, let me explain to you my perspective on the whole thing.
Two thirds of buy-to-let properties bought in the last eight years have been bought, mortgage free so they won’t be affected by the Chancellors’ tax changes.
Landlords historically, have only been able to normally borrow up to 75% of the value of the rental property. In the last property crash of 2008, property values dropped by the not so insignificant figure of 17.3% in Uxbridge, but even then, when we had the credit crunch and the world’s banking sector was on the brink, no landlord would have been in negative equity in Uxbridge.
I think landlords selling is somewhat unlikely where there is good rent cover over the mortgage that they might have. On the whole rental property tends to be well financed.
Bad News Sells
I believe we have a case of ‘bad news selling newspapers’ and I think buy-to-let, and the property market as a whole, will carry on relatively intact. It’s true, reducing tax relief will hit landlords who pay the higher rate of income tax and this may slightly diminish buy-to-let as an investment vehicle, but I doubt people will sell.
Some may restructure into limited companies for example to hold their property which will be good news for their accountants.
Perhaps some landlords have bought with their hearts, not their head. You would never dream of investing in the stock market without doing your homework and talking to people in the know. If you want to make money in the Uxbridge property market as a buy-to-let landlord, it’s all about having the right property and as you grow, the right portfolio to offer a balanced investment that will give you both yield and capital growth.
How is Buy To Let in uxbridge Performing?
The Uxbridge buy-to-let market still offers good investment opportunities to new and old alike. Those who have bought in the last twelve to eighteen month have reaped the benefit from buying in Uxbridge, because the town offered a combination of reasonable house prices with subsequently increasing rents. Property values have risen by 22.8% in the last eighteen months in Uxbridge, whilst looking at rents, in September 2015, average rental values for new tenancies were 4.1% higher than last year, which is particularly interesting as they only rose by 1.9% the previous year.
I can’t stress enough the importance of doing careful research into any property investment. One source of information and advice is course by Uxbridge Property Blog here where I have similar articles to this about the Uxbridge property market.