In the wake of base rate increases, a silver lining has been created for UK landlords as interest rates plummet in the slow and volatile buy-to-let market.

When it comes to tax reforms, it tends to be all doom and gloom for both investors and landlords alike, and it usually is – however with interest rates at an all-time low, there is an opportunity for landlords to escape the punishing tax and regulatory changes affecting the rest of the property market.

Dwindling buy-to-let property investments

Earlier this year, research revealed that the number of buy-to-let property purchases and investments had plummeted in the first half of 2018, with a 13 percent decrease in market activity. The unnerving statistics are only worsened by the fact that in the past three years the number of landlords purchasing buy-to-let property has decreased by a substantial 33 percent.

Undoubtedly some UK regions have suffered at the hands of a slow market more than others, with the South East experiencing a decrease in buy-to-let market activity of 45 percent, closely followed by Scotland with buy-to-let property purchases falling by a staggering 44 percent.

Punishing tax and regulatory changes

Landlords have bared the brunt of punishing tax and regulatory changes introduced by governing bodies more than any other professional in the industry, with an average of 4,000 buy-to-let properties now being sold each month as a result.

The 3% stamp duty surcharge paired with a change to House of Multiple Occupancy licensing has resulted in a lack of faith in both the market and the government’s control. Alongside changes to mortgage interest relief, the replacement of wear-and-tear allowance and the proposal of even more savage changes, landlord enthusiasm has been dampened so much so that the UK buy-to-let market is now at serious risk.

The silver lining for landlords

Despite the stagnation of the buy-to-let market, there is a silver lining for landlords brave enough to face the ever-changing property market.

Mortgage brokers are now lowering their interest rates and relaxing their lending criteria in a bid to entice landlords and boost market activity, and according to price comparison site ‘Moneyfacts’, mortgage rates are now at a near record low. Research disclosed that for a five-year fixed term mortgage the average rate is now a mere 3.4 percent, a 3.77 percent decrease since 2016.

Whilst some landlords have fled in fear, there is still hope yet for those looking to benefit from the attractive rates lenders are being forced to offer, and with rates already beginning to rise again, now could be the perfect time to invest in UK buy-to-let property.

The uncertainties created by new punishing reforms and a slowing market are massively outweighed by the extensive opportunities available to landlords. UK buy-to-let hotspots continue to offer some of the most attractive yields in the world, and property investment as a whole remains a lucrative opportunity for those looking to enjoy an attractive and steady income stream.

Author Bio
Hopwood House are specialists in property investment, with a large portfolio of property investments in the student property, hotel room and buy-to-let investment markets.

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Daniel Peacock

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