Buy To Let – It Still Works After Tax Changes
The news is full of the changes to buy to let mortgages via the new Mortgage Credit Directive (MCD) and via the changes to Stamp Duty Land Tax (SDLT), oh and you can add in they way loan interest and capital is handled as an expense. You would be forgiven to thinking that someone has something against landlords.
In truth, maybe they have.
However as a landlord said to me recently, once it all settles down then the changes to tax will be absorbed into the price and then back to business as usual. Not being one to listen to hyerbolé, I did start to think that there may be something in it.
Property Prices London & South East
An article in the Guardian business section referred to the increase in house prices across London and the home counties. When you read the percentage increase in property values you start to think that even after changes to SDLT there remain potential growth of capital asset.
House price increases in these areas looked like;
- Slough 19%
- Luton 17%
- Reading 14.6%
- Thurrock 17.2%
- London 13.5%
That represents potential great returns in a 12 month period. Granted that future rises are unknown and uncertain, but it does start to make a case that buy to let could continue to be a popular choice of investment.
Buy To Let Borrowing
Once thing that has held back some investment is access to finance. The easy, straightforward buy to let mortgage is still achievable, especially for those investors with some experience and background to hold. The more challenging are the properties that are not straightforward, the properties next to pubs, over take-aways, subject to recent change of use, or being purchased by an ex-pat.
The good news for landlords who want to continue expanding is that there are lenders out there keen to be part of the ride. Whilst some criteria driven lenders may struggle, there are good lenders out there keen to work with property investors, and some pretty good terms to go along with them.
So we start to get a balance, adverse changes to tax and loan cost application starts to balance against asset value growth and access to finance.
Is buy to let about to go away, no, it may actually start to go the other way.
Any comments about this article or if you want more details on buy to let then get in touch.
By Dave Farmer