The Investment Property Market
A recent report from the Council of Mortgage Lenders showed that loans to landlords in April 2014 were 57% higher in value than they were compared to April 2013 and there was a 43% increase in the number of loans. Perhaps even more dramatic were official figures showing that house prices in England and Wales increased in April this year rising by 6.7% compared with the same month last year, with London house prices increasing by 17%.
With rises in house prices of these levels in London, property investors are looking beyond London to secure the best returns on their investments. According to the experts what fuels the best returns is a mix of relatively lower house prices and strong demand frequently from students and young professionals. So it is no surprise to see note that the highest returns are in Southampton with gross yields of over 8.5%, Manchester with gross yields of just under 8%, Nottingham and Blackpool with just over 7.5%, and Kingston upon Hull just under 7.5%.
Often property investors come into the market, not having studied where the best returns that can be obtained, but by purchasing a new home and at the same time keeping their original home and turning it into an investment. In recent years lettings growth has been partly due to Principal Private Residence (PPR) relief being available for property sales for up to three years after the owner occupier has ceased to reside in the property. However recent legislation changed this and the relief is now only available for up to eighteen months.
This change, along with other recent changes, make it more important than ever to get the best advice before buying investment properties, not just from a financial advisor to ensure that you obtain the right mortgage but also tax advice to ensure that the investment structure is right in the first place.
So if you are considering entering the buy-to-let market or are already an investor, now is the time to obtain some rounded tax advice. The market is changing rapidly and the advice that was obtained a few years ago is not necessarily the best advice today.
If you do require any financial advice regarding property investment, please contact Wendy Patterson.