With the buy-to-let landscape continuing to evolve, landlords need to consider four changes to take advantage of the market in 2020.
The removal of mortgage interest tax relief, stricter buy-to let mortgage terms and a 3% stamp duty charge on second homes have all affected the private rented sector in recent years. Tighter regulations and smaller profits have forced many landlords, particularly those with only one property, to sell up.
While the heyday of the 2000s when the market saw rapid growth may be over, there are still plenty pf reasons to invest in property.
Research from Perrys Chartered Accountants found that 82% of Londoners still think buy-to-let property is a good long-term investment. In fact, the younger generation still see it as a way to plan financially for the future.
Estimates suggest that around half a million new rental homes will be required by 2023, so there is still growth in the market for landlords who choose the right strategy.
Here are our four top tips for buy-to-let success in 2020…
Low interest rates
While costs for letting out a property have risen, landlords can currently take advantage of historically low interest rates, coupled with increased competition in the mortgage market. Not surprisingly, investors are moving towards five-year, fixed-rate deals which offer the best value.
Look for value locations
While London has traditionally seen strong demand for lettings, the high cost of properties has forced canny investors to look further afield for attractive yields. In reality, landlords don’t need to look very far outside the M25 for some great locations, particularly in Hertfordshire and Essex.
While St Albans and Hertford are highly desirable by commuters, new towns such as Stevenage, Hemel Hempstead and Harlow offer value and more stock as they are areas of development and regeneration.
Hunt for HMOs
Converting properties into houses in multiple occupation (HMOs) has been a favourite tactic for landlords, particularly in larger towns and cities with universities. Having multiple tenants brings an extra layer of security, and there are also some tax advantages.
It is important that landlords do their homework before investing in HMOs as they require a lot more legislation, including a licence from the local authority.
Use a respected letting agent
With wave upon wave of legislation coming from local and central government, there has never been a greater need for landlords to get on board with a professional letting agent who can help them navigate the choppy waters ahead.
The penalties for getting it wrong can be incredibly severe, so an experienced and reliable letting agent will be able to take care of all the necessary safety checks and paperwork. The risk of void periods will also fall as agents maintain a register of interested tenants in the local area.
If you have any questions regarding the private rented sector, please contact Knight Property Management for a free, no obligation chat. Call us today on 01992 308181.
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