Ask The Agent
Richards is an independent Estate Agents in Corfe Mullen, specialising in residential properties for sale and rent as well as property management in Corfe Mullen, Wimborne and the surrounding areas.
Jason Spiers MNAEA, the owner of Richards Estate Agents, has been an agent for over 25 years.
Let us know any
questions you may have about moving and he’ll answer them for you.
Hi Jason,
Is there any point in becoming a Landlord? Pete S.
Hi Pete,
Thanks for asking such a simple question knowing it’s something a lot of people are thinking, especially as it seems the Government has ‘had it in’ for private landlords in recent times!
A few years ago, becoming a landlord seemed like a quick route to a good income. Low buy-to-let mortgage rates, high rent levels and rising property values all added up to an attractive ‘pension’ pot. However, tax changes in the last few years have made it trickier to achieve a decent profi t on a buy-to- let. Tricky, but not impossible. We all know that money in the bank doesn’t give any sort of return anymore and is it truly safe?! Could a buy-to-let property still be the income answer?
I believe that a buy-to-let works well as part of your overall income, but must be a medium to long term investment to ensure overall sensible returns.
What’s different today? Buying an investment property now incurs a 3% additional stamp duty charge.
Introduced in 2016 it adds an immediate premium. Factor that into your sums, so you don’t end up with an investment property that won’t return on the outlay. In the long term you should see this initial extra sum outweighed by the gain in the property’s value.
Previously landlords could offset 10% of their annual rental income against their tax bill to refl ect the cost of fi xing wear and tear. Now scrapped, this could impact your profi t margins.
Higher and additional rate tax relief on mortgage interest ends altogether in April 2020. This means landlords can’t deduct the cost of interest on their buy-to-let mortgages from their rental income in order to reduce their tax bill. That’s going to hit higher-rate taxpayers the most. From this year you will get a tax credit for 20% of your mortgage interest payments (less generous than the old system, but it’s something). Of course, if you buy without a mortgage this shouldn’t affect you.
A triple whammy, but there is good news out there for landlords. According to The Royal Institute of Chartered Surveyors UK, rents are expected to climb by up to 15% by 2023 as tenant demand rises. The Offi ce for National Statistics show that private rental prices rose by 1.3 percent in the 12 months to May 2019 and is expected to show another rise this current year. Mortgages are still good value with low interest rates, and property prices continue to rise (of course the value of a home can go down).
Whilst the tax changes might have made things trickier for landlords, they do not appear to have made it outright unprofi table and, with rental demand in the local areas at an all-time high, an investment property still makes good sense.
Kind regards Jason
Ask The Agent is brought to you by Richards Estate Agents in Corfe Mullen.
If you have a question for Jason, please email:
jason@richardsestateagents.co.uk or feel free to pick up the phone and call us on (01202) 602121.
22 To advertise, please contact 01202 657317 or email
info@broadstonelink.co.uk
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