2018 is shaping up to be a mixed bag of improvements as well as testing moments for investors in the UK housing market. FJP Investment has put together a list of the top six things that we think investors should be aware of for 2018.
- HMO rules are about to change
The three-storey minimum rule which currently dictates whether a house can be classed as a house in multiple occupation (HMO) is possibly going to be removed which would mean at least an extra 160,000 to 170,000 properties coming into the mandatory licencing scheme. There is also talk of a minimum room size being brought in for such houses.
- Equal playing field when it comes to capital gains tax
With indexation allowances meaning businesses are entitled to more tax relief when it comes to capital gains versus that of individuals, this change is coming into place in 2018 and will be a move which brings the corporate system firmly in line with personal capital gains tax. Although that being said, this will mostly effect those selling properties that are not their primary residences, for a profit!
- Council tax expected to increase
Local authorities will be allowed to increase their council tax in some areas by anywhere up to 3% as of April 2018. In some areas where councils are providing social care, the increase could be by as much as 5.99% and this is without having to hold a referendum. This move is mainly about plugging the massive funding gap in the adult social care sector. This could be a good time to look at care home investments.
- House prices expected to stagnate
While some analysts are mixed with regards to what they expect to happen with house prices in 2018. The total value of UK property stock hit a record high of £6 trillion in 2017 and expectations are said to be for the house prices to deny the upward trend. Out of all of the UK, London is expected to suffer the most with analysts at FJP Investment predicting a -2% drop in the year ahead.
- Interest rates expected to rise
With mortgage lending setting a record high towards the back end of 2017, there are many borrowers making the most of the low interest rates and signed up to the fixed-rate deals ahead of the base rate rise in November. While the fixed rate option is likely to remain popular there is an expectation for a further increase in the base rate from 0.5% to 0.75%
- Property-tech boom
Property technology has grown from around £250 million in 2015 to £3.2 billion in 2017! Many experts including FJP Investment are expecting this to rise in 2018. With the industry largely digitalised by the likes of Zoopla and Rightmove, there is no chance of going back to the days of customers hitting the high-street in search of properties in the shop windows.
FJP Investment is a team of investment specialists sourcing a wide range of investment opportunities both in the UK and overseas. Products include the new release of property bonds from UK property developer The High Street Group.
Sign up for regular property updates & receive investments in your inbox
Daniel Peacock