Published: 27/09/2022 By Ben Allman
With the news headlines screaming about, stamp duty threshold increases, minimum Interest rates increasing and tax cuts I thought I’d spend some time talking about why the lettings market will continue to thrive and why rents will continue to surge and possibly spiral out of control.The stamp duty threshold change doesn’t affect someone purchasing an investment property or second home.
The average house price within 15 miles of the city centre according to Rightmove is £300,000. If as a landlord you buy an average property in Norwich for £300,000 a landlord will be paying £14,000 in stamp duty. With the median rent of a three bedroom property being £1200pcm, equivalent to one year’s rent before repaying your stamp duty outlay.
My opinion may be controversial to tenants and possibly single homeowners, who see landlords as vacuums hoovering up all the properties for their personal gain, but why don’t we reward landlords, who offer good quality properties?
Whilst interest rates are predicted to rise over the next 6 months to possibly higher than we’ve seen this side of the millennium, what kind of incentive is there for a landlord to buy a property with a 5% net return when they could possibly get this (or higher) sitting in the bank with zero effort, when properties are at peak prices?
The fact of the matter is there is a difficulty to get on the ladder, there is always going to be a huge supply of tenants. If we want rents to become manageable and rental prices to stabilise, we need to increase the supply, offering quality rental homes. Unless the government have a magic wand they can wave, maybe incentivising landlords is the solution.
Corporation tax dropping from 25% to 19% will be a small boost to landlords whos properties are held in limited companies, further tax cuts, stamp duty reductions as well as individual mortgage relief is what I would expect would help boost the supply and encourage landlords to begin spending in the UK property market again, after 6/7 years of punishment from the governments in the UK.
Do you have a portfolio of properties you rent?
Seeing a mortgage broker is something that I would strongly recommend reviewing your portfolio now, before interest rates continue to rise. We recommend Mortgage Response, with offices in Hethel & Diss. They can be contacted via their website https://mortgageresponse.co.uk
If you are looking for a new agent to manage your properties affectively, rather than just collecting a management fee, then contact us for a full review of your portfolio. We can review not just your financials to ensure that you are maximising your portfolio with the current market conditions but check your paperwork to ensure you are compliant and up to date with the latest legislation.