A certain narrative has been allowed to take hold in recent years about the UK buy-to-let sector, particularly in relation to its attractiveness for new and established investors alike.
The story so often told is of an industry that has been buffeted by regulatory, market and political changes alike – but is buy-to-let genuinely past its best in 2019, or simply opening up a new and exciting chapter?
A new reality for serious uk property investors
For about two decades, the UK buy-to-let sector saw swashbuckling growth – but this also served to make it a target for politicians wishing to clip its wings and in the process, place greater emphasis on first-time buyers instead of those intending to let their acquired properties.
The Stamp Duty surcharge was a particular point of discussion in 2016, being introduced in April of that year and bumping up the purchase price of buy-to-let properties by three per cent. Changes were also made to the previously generous landlord wear and tear allowance, lending regulations were tightened, and buy-to-let investors found themselves facing greater bureaucracy in general.
However, it can be easy to overemphasise the impact of these developments, and to therefore overlook the continued attractiveness of British buy-to-let today.
Recent market statistics, for instance, actually show yields of between four per cent and five per cent continuing to be enjoyed across the country, compared to current UK inflation rates hovering at about two per cent, and the even lower percentage income that a 10-year UK government bond pays.
Furthermore, buy-to-let is becoming ever-more professionalised as casual landlords offload their properties, freeing up new opportunities and lessening competition for investors in this proven industry. In any case, while the capital growth currently on offer may not be as spectacular as has often been seen over the last 20 years or so, buy-to-let property investment still frequently offers a pleasing level of income compared to other asset classes.
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We feel here at HE Global Investments that there continues to be much to be excited about in the present UK buy-to-let sector, and it seems that investors agree.
According to one recent survey of 500 landlords and real estate investors, for example, 39 per cent of those polled said they planned to expand their buy-to-let portfolios this year, compared to the mere 11 per cent who expected to end 2019 with smaller holdings.
What’s more, 35 per cent of those who said they intended to buy property in 2019 said they were aiming to do so in London, belying suggestions of a struggling buy-to-let market in the capital. Other UK cities widely mentioned by respondents included Manchester (33 per cent), Liverpool (25 per cent) and Nottingham (15 per cent).
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