The latest research by the nationwide buy-to-let specialist, Sequre Property Investment, has revealed that despite a string of government changes around stamp duty, tax relief and a potential change to capital gains tax, UK landlords remain undeterred where their investment intentions are concerned. While changes to tax relief and a
The latest research by Birmingham and Newcastle-based property developer, StripeHomes, has examined where in England buy-to-let landlords can achieve the best rent yields, discovering that the North provides the most valuable investment opportunities. The buy-to-let industry has endured some tough times in the last couple of years. Not only has
Jackson-Stops & Staff, one of the UK’s leading estate agents, has released new information that suggestions as to the reform of stamp duty on second homes, may actually fail to achieve the goal of putting off buy-to-let investors. The information, in effect shows that inflation in housing prices may actually
Unphased by some of the major changes in tax this year, it has been reported (in recent research) that the majority of UK property investors (circa 56%, in fact) are resolute in continuing with plans to purchase further buy-to-let assets over the course of the next year. The news is,
BDC 319 : Aug 2024
The latest research by the nationwide buy-to-let specialist, Sequre Property Investment, has revealed that despite a string of government changes around stamp duty, tax relief and a potential change to capital gains tax, UK landlords remain undeterred where their investment intentions are concerned. While changes to tax relief and a three per cent increase to the rate of stamp duty on buy-to-let purchases was predicted to cause a mass exodus of landlords, the research by Sequre found that just 10% have sold part of their portfolio in the last five years. Ascend then asked if they planned to sell up in the next five years and just 19% stated they were thinking of doing so. Despite the government’s best intentions, changes made to dampen buy-to-let profitability aren’t the driving factor they were intended to be. In fact, the majority of landlords stated that they were thinking of selling up because they had become tired of dealing with tenants issues. A problem that was no doubt intensified during the pandemic when the government implemented a ban on tenant evictions. The next biggest factor when considering a buy-to-let investment is retirement, with most landlords looking to sell up in order to enjoy their golden years. However, the previous changes to landlord tax relief did rank as the third most influential factor, while the increase in stamp duty tax followed closely behind. With a change to capital gains tax failing to materialise in the last Budget, it ranks as the least influential factor, with more landlords exiting in order to invest in different asset classes instead. Sales Director at Sequre Property Investment, Daniel Jackson, commented: “Investing in property remains one of the safest options you can make in this day and age and so it comes as little surprise that the majority of landlords remain confident with their investment and have no plans to exit the buy-to-let sector. It’s also interesting to see that the government has failed to intimidate the nation’s landlords, despite a consistent campaign to reduce profit margins and force them out of the sector. In fact, more landlords have decided to leave having grown tired of dealing with tenants than they have because of various government tax changes. So it looks as though the government will have to actually build some more homes if they wish to address the current housing crisis, rather than rely on hard-working landlords to boost the nation’s property stock levels.” Survey of 797 UK landlords carried out by Sequre Property Investment via consumer research platform Find Out Now (21st July 2021). Have you sold part or all of your buy-to-let portfolio in the last five years? Answer Respondents No 90% Yes 10% Do you intend to sell part or all of your buy-to-let portfolio in the next five years? Answer Respondents No 81% Yes 19% What has been the driving factor behind this? (Tick all that apply) Answer Respondents Tired of dealing with tenant issues 24% Retirement 23% Changes to landlord tax relief 19% Increase in stamp duty tax for B2L purchases 12% Investing in a different asset 11% A potential increase in capital gains tax 11%
The latest research by Birmingham and Newcastle-based property developer, StripeHomes, has examined where in England buy-to-let landlords can achieve the best rent yields, discovering that the North provides the most valuable investment opportunities. The buy-to-let industry has endured some tough times in the last couple of years. Not only has COVID-19 profoundly affected the reliability of rental income, but changes to regulations and tax rules have also made it more difficult for landlords to maintain a good level of profit from their investments. Proposed changes to Capital Gains Tax allowances were threatening to make the situation even harder, but now that this has been put on the backburner, landlords can finally start looking forward and thinking about how best to grow their rental portfolios. When doing so, rent yields are the most important statistic to examine, so StripeHomes has analysed all of the available data to provide a list of England’s best locations for high-yield buy-to-let returns. By Region On a broad regional level, the best buy-to-let yields can be found in the North East. Of course, the North East region is huge and so research when investing should always be undertaken at a more granular level. However, the region as a whole is currently home to an average house price of £144,032 and an average rent value of £566 per month, the rental yield is 4.7%, well above the national average of 3.9%. Second on the list is Yorkshire & Humber, where the average house price is £179,408 and the average rent is £631 per month, delivering a good yield of 4.2%. The third-most profitable buy-to-let region is the North West with an average yield of 4.2%, followed by London – the first location not found in England’s North – where high house prices are matched by high rent values to create a yield of just under 4%. Rounding off the top five is the West Midlands, where an average house price of £216,973 meets an average rent value of £697 per month to create a yield of 3.9%. By Local Authority This yield analysis can also be narrowed down to examine individual towns and cities, which shows that the very best rental yields for buy-to-let landlords in England are found in Newcastle-upon-Tyne. With an average house price of £177,821 and average monthly rent of £844, the city offers an average yield of 5.7%. Blackpool is close behind with an average house price of £116,939 and an average rent of £540 per month creating a yield of 5.5%. Stoke-on-Trent also boasts yields of 5.5%, while Burnley in Lancashire and Knowsley in Merseyside both offer yields of 5.4%. It’s clear from this data that the best rent yields in England are currently found in the North, demonstrated by the fact that 16 of the country’s top 20 yield locations are found north of Nottingham. Managing Director of StripeHomes, James Forrester, commented: “It’s great to see a number of areas presenting strong yields to buy-to-let investors despite the government’s best efforts to reduce profit margins in an attempt to disincentivise landlords and free up housing stock for general homebuyers. As the backbone of the rental market, the buy-to-let sector plays an incredibly important role in providing many with a place to live, but we simply can’t expect the nation’s landlords to provide this service at a loss. However, the year ahead looks positive and with travel restrictions lifting, a return to face to face teaching at universities as well as a return to the physical workplace, increasing demand should help boost many areas of the market.” Table shows the current average yield in each region of England Location AveHP – April 2021 Average rent pm – March 2021 Rental yield North East £144,032 £566 4.72% Yorkshire and The Humber £179,408 £631 4.22% North West £183,299 £636 4.16% London £491,687 £1,623 3.96% West Midlands Region £216,973 £697 3.85% East Midlands £213,308 £660 3.71% South West £279,951 £840 3.60% South East £341,358 £999 3.51% East of England £313,964 £889 3.40% England £268,380 £864 3.86% Sources Gov.uk – UK House Price Index Office for National Statistics – Private Rental Market Summary Table shows the areas of England with the highest average rental yield at present Location AveHP – April 2021 Average rent pm – March 2021 Rental yield Newcastle upon Tyne £177,821 £844 5.70% Blackpool £116,939 £540 5.54% Stoke-on-Trent £120,043 £547 5.47% Burnley £105,618 £477 5.42% Knowsley £142,030 £641 5.42% Hyndburn £107,148 £482 5.40% Sunderland £126,520 £541 5.13% County Durham £117,576 £502 5.12% Barrow-in-Furness £131,544 £560 5.11% Salford £182,091 £770 5.07% Manchester £203,169 £838 4.95% Pendle £120,840 £498 4.95% Newham £382,016 £1,536 4.82% Blackburn with Darwen £127,154 £511 4.82% City of Nottingham £172,540 £682 4.74% Preston £143,743 £568 4.74% Barking and Dagenham £312,288 £1,226 4.71% Middlesbrough £125,115 £490 4.70% Stockton-on-Tees £146,819 £573 4.68% City of Bristol £306,482 £1,196 4.68% Sources Gov.uk – UK House Price Index Office for National Statistics – Private Rental Market Summary
Jackson-Stops & Staff, one of the UK’s leading estate agents, has released new information that suggestions as to the reform of stamp duty on second homes, may actually fail to achieve the goal of putting off buy-to-let investors. The information, in effect shows that inflation in housing prices may actually offset the reform changes, and that the 3% surcharge placed on second homes may not yet be enough to actually deter potential investors from seeing buy-to-let investments as optimistic. And while it has been declared that there has been a surge in registrations made for buy-to-let properties up to April, it has also been highlighted that the majority of these investors will see greater returns from the inflation of property prices in the modern recovering housing market (potentially in under a year), thus positioning the 3% surcharge as nothing more than an inconvenience. In fact, Jackson-Stops & Staff has warned that those most affected by the surcharge will actually be tenants who will suffer from increased rental prices as reported previously. This, in effect, will likely deteriorate the market conditions for those looking to break onto the rental market as already previously highlighted, with landlords still seeing optimistic market conditions for at least some time. As explained by Jackson-Stops & Staff’s Chairman, Nick Leeming, the government’s attempts to even the playing field for property investors and first-time buyers, the situations does nothing to remove the spotlight which landlords should be seeing on investments into property as one of the most solid investments to this day. He added: “The idea that stamp duty tax will act as a deterrent is a fiction, as for most landlords it won’t amount to a significant figure.” Of course, with the impacts, once again, hitting the tenants of properties as opposed to the pockets of landlords, the growing debate on the depreciated affordability of rental housing stock is of even greater note. The question, however, is as to whether the government can find an alternative way to dissolve interest in buy-to-let investment in a way which won’t come down on the tenant.
Unphased by some of the major changes in tax this year, it has been reported (in recent research) that the majority of UK property investors (circa 56%, in fact) are resolute in continuing with plans to purchase further buy-to-let assets over the course of the next year. The news is, as expected, regarded as a bold move for such investors with reference to the previously reported market changes which will make it even more difficult for buy-to-let properties to effectively turn a profit (many reported to even have losses predicted). Of course, those looking to invest aren’t just diving in head-first, and it is instead reported that many are taking a responsible approach to their investment, with many establishing themselves as limited companies so as best to minimise the impacts of this year’s tax changes (circa 40%). Additionally, many other investors have laid out plans to increase rents at their properties to ensure a level of profitability also (some 33%). Yet, naturally, some investors have taken heed of the changes to both stamp duty and tax relief, taking a more cautious approach to their investment plans. Of those which have stated not to be securing any additional buy-to-let assets this year (the remaining 44%), a large portion (20%) attributed this to caps placed on tax relief, whilst most of those remaining (16% in total) referred to the changes made to stamp duty as one of the key causes of concern. However, following on from our recent nod to the industry changes, the news is well received, with a shade more confidence in the sector than was originally predicted. Naturally, the prospects highlight an unforeseen continuation in opportunity for industry lenders, who will be able to continue benefiting from the considerable interest in buy-to-let properties and commercial mortgages. How long this trend is to continue, however, is hard to say.
