Philip Hammond delivered his first Spring statement in March and the Chancellor seemed to have a spring in his step. The UK economic growth rate is slightly faster rate than predicted in his November budget, and borrowing is down. But austerity still maintains a firm grip on the country – and it isn’t about to end any time soon. So when it comes to the property market is it all doom and gloom? Or is investing in property right now a smart move?
The world of property investment has been a tumultuous one over recent years – particularly for the buy-to-let market. Figures suggest that the buy-to-let bubble could well have burst, with buy-to-let mortgage lending now at a 4 year low. The heydays of landlords enjoying record low mortgage rates and tax benefits have gradually been curtailed. Both legislative and economic change have increasingly squeezed their profits.
From April 2016 landlords were hit with a 3 percentage point Stamp Duty surcharge for “additional properties”. This instantly increased the cost of buying a house. Mortgage interest relief for higher rate taxpayers was also scrapped, denting rental properties’ profits. These factors, coupled with the uncertainty over Brexit, interest rate increases and global economic slowdown, means many landlords are deciding to offload their property portfolios.
Outside of buy-to-let there remains a housing crisis across the country. The struggle to own a property is a very real and difficult one. Concessions where Stamp Duty was abolished for first-time buyers on property purchases of up to £300,000 and on the first £300,000 have generated interest amongst first time buyers, yet the strain on the housing market remains.
Yet owning a property can be a very real and potentially positive option for buyers. Buyers may find they now have opportunities to buy that didn’t exist for them before. Buying a property can be a lucrative and rewarding exercise, whether as an investment or to own your own home. You just need to ensure you enter into the process with your eyes wide open.
Forge ahead armed with professional advice and be prepared to commit to it for the long haul to ensure you get the best return on your investment.
Start as you mean to go on
Gone are the days of buying a property on interest-only mortgages with a small deposit. Always seek the advice of an independent adviser who can offer advice on the best mortgage options for your circumstances. Your adviser will provide guidance on just how much you can borrow. They should be able to help you get a “mortgage in principle” agreement in place before you buy which means you’ll be in a stronger position – and know exactly how much you have to play with.
You’ll need enough finances to fund a decent deposit, all your legal expenses, surveys and stamp duty, as well as the moving costs. Bear in mind that we’ve enjoyed record low interest rates for the last 10 years and this will inevitably change. It’s just the ‘when’ and by ‘how much’ that we don’t know. You’ll need to be able to weather the storm financially, whenever it hits.
Location, location, location
Where you buy is a huge consideration. It’s not just about being happy with where your property is located but ultimately how easy it will be to sell your home when you decide it’s time to move on. Selling a property and moving is an expensive business so choosing the right area is key. You can completely refurbish a house inside and out but you can’t pick it up and move it to a different area!
Capitalising on the Brexit effect
While the government goes back and forth with the EU on the finer details of the Brexit agreement, the housing market remains jittery about the long term effects, particularly in London. In Wandsworth for example the last year has seen a fall of 15% in property prices. The looming uncertainty of Brexit coupled with the expected rise in interest rates are no doubt contributing factors in the cooling market. This period could prove the perfect time to invest in property, making property investment an attractive prospect for buyers.
Thinking outside the box for property investment
If you do want to invest in an additional property but the increase in taxation for landlords leaves you cold, all is not lost. Whilst the buy-to-let in a traditional sense is getting a tough ride, other approaches via platforms such as crowdfunding are gaining traction. These types of investment are an alternative to direct investment, becoming an increasingly attractive alternative for landlords. People of all ages and socio-economic backgrounds can invest in the buy-to-let property market via crowdfunding platforms. That way they spread their risk, they aren’t shackled by a mortgage at such a young age, and they are able to generate both income and capital growth.
Whatever your reason for entering the property market – either as a first-time buyer, you are relocating within the UK or looking for a rental investment, Light Intervention can help. We will take your requirements and conduct the property search on your behalf. We will match properties to your needs, filtering out those properties that don’t match your requirements.
Light Intervention will negotiate and liaise on your behalf, assisting with all technical and legal details throughout. And once you’ve purchased your ideal property, we can also organise and oversee refurbishment work or comprehensive modernisation. This will help create immediate capital growth for you post purchase.