Successive governments haven’t exactly been making life easier for the seasoned or newbie property investor. The reason being housing in the UK is in such short supply and the situation has hit crisis point. This has resulted in ministers trying to cut back on the amount of landlords and properties in the private rented sector.
They want individuals, couples and families to own the homes instead. But high property prices and high inflation is making the situation difficult – which is why private rentals are more necessary than before…
Demand for rental property is higher than ever, which is why property investing still makes sound financial sense.
Investors in some sectors, however, have had to rethink their property investment strategies over the past year or two after the government announced the Section 24 measures to cut landlords expenses. They have also had to deal with the additional Stamp Duty on second homes. But, like most things in life, there are ways and means…
- Section 24 changes. This means that by 2020 landlords will no longer be able to claim any mortgage interest relief. It’s already begun on a sliding scale i.e. 50 per cent this year, 75 per cent in 2019.
To get round this, some landlords have created Limited Companies, meaning they can still claim expenses and will pay Corporate Tax instead (which is actually being reduced to 18 per cent in 2020).
Others have put their properties in a partner or another family member’s name – someone who is a lower tax payer. You could also pay higher pension contributions, remortgage or only buy properties with a guaranteed high yield. In other words, there are a number of tweaks you can make to a property investment strategy to ensure you remain very profitable.
So now we have that out the way, why else should you invest in property in the UK at the moment? Here are a number of pretty good reasons:
1. Rental yields right now are averaging anything from three up to ten per cent. You’ll have a hard time finding a high street savings account that does similar.
2. You’ll be continuing to gain from appreciation of the capital value of the property as each year passes.
3. There are more people looking to rent than there are available properties, so you can expect void periods to be kept to a minimum.
4. Rents tend to rise at the same time as inflation. This guarantees you a predictable and consistent income over the lifetime of the property.
5. Mortgage interest rates are extremely low at this moment in time – although another hike is predicted for some time this year so if you’re thinking of re-mortgaging or taking out a mortgage then do so as soon as possible to benefit from the lower rate.
Find out more about investing in bricks and mortar and how to go about sourcing property at www.sourced.co and www.sourcedfranchise.com to find out how to get started in your own property investment business.