Legislation in 2016 decreed that the purchase of each additional property in the buy-to-let sector would be subject to a further surcharge of £40,000. Expert analysis duly predicted a substantial decline in this form of investment. However, recently released data from official HMRC sources for the ensuing tax year have actually shown a phenomenal growth.
Why Buy-to-Let is still a Worthwhile Investment
Data released by Your Move for April shows regional variations in the rental market, with the West Midlands reporting the strongest growth for the period. The conclusion from the report is the rental market in England and Wales continues to see steady growth, with the average rental for a property being £861, an increase of 0.5% on the same period in 2018.
Building a Reliable Portfolio
Investors hoping to build a secure financial portfolio for the future are following the examples of the past by becoming landlords instead of shareholders. Purchasing residential property to generate a reliable rental income has always been a traditional method of maintaining and generating wealth. Shares purchased in commodities or industries are often at the mercy of fluctuating markets, government strategy and changes brought about by technology. The Stock Exchange is a fast-paced environment that requires experience and skill in managing a secure financial future.
Investment in buy-to-let properties offers investors including those without a background in finance, the opportunity to create a reliable portfolio that is easier to understand and control. The value of residential properties continually keep pace with inflation and provide real long-term growth that is relatively stable and predictable. A portfolio of buy-to-let properties offers reassuring flexibility with the choice of selling individual homes or remortgaging to raise funds when necessary.
A level Playing Field
Private landlords suffered a brief decline from the early to mid-twentieth century when large-scale municipal investments finally provided affordable housing managed by local authorities. However, the success in recent decades of selling council-run houses to sitting tenants at bargain prices has indirectly led to the balance of a reduced amount of rented housing stock restoring private landlords to a position of prominence. The social improvements such as sales fostered in many city districts have now made those ex-council houses desirable targets for the portfolios of a growing number of novice landlords with limited funds. With an increasing population and lengthy waiting lists for social housing, there’s no shortage of potential tenants providing reassuring confidence for today’s investors in buy-to-let properties.
Ambitious Buy-to-Let Portfolios
Investing in prestigious buy-to-let properties has often been restricted to London. A project such as the recently completed Madison Tower at Canary Wharf is a fine example of how investments in luxury apartments carry the potential for the highest rental income. However, investors in ambitious schemes are suddenly being presented with the freedom to make multiple buy-to-let investments through a large number of opportunities in the luxury sector across the UK. As the challenges from foreign markets have impacted upon the traditional industrial centres, cities such as Birmingham, Newcastle, and Manchester have had to change direction to attract new investment. Inner-city regeneration has created jobs with high salaries in the finance, IT and hospitality industries. Luxurious apartment schemes have followed in their wake providing buy-to-let investors with increased opportunities to raise high rental incomes from specialist staff on short-term leases.
There has never been a greater choice of mortgage schemes for prospective landlords. With more than two thousand on offer, buy-to-let landlords can take their time selecting a package that suits their circumstances. It isn’t difficult to discover generous packages that realise high loan to value rates combined with low deposits. Investors in buy-to-let residential properties remain undeterred by the risk of increased interest rates that often accompany such easy entry schemes. The financial reality that rental incomes have achieved a significant 55% increase over the last five years is an incentive that buy-to-let investors are finding hard to resist.
The Security of Buy-to-Let Investments
Landlords in the buy-to-let sector are currently enjoying a reassuring 15% annual increase in rental that provides real security. With tenants taking long-term leases for an average of two years, landlords are achieving stable incomes. Purchasing residential property as a buy-to-let investment is a flexible commodity combined with a high degree of control. It enables investors from all walks of life the opportunity to build a portfolio of properties at their own pace in areas that complement their funds. In spite of gloomy forecasts and the surcharge on additional properties, the lure of low deposits and the reassurance of reliable rental incomes have ensured that investing in buy-to-let properties remains an attractive proposition. Significantly, prospective landlords are also taking advantage of the wealth of investment advice that’s available to encourage them to make sound investments in buy-to-let residential property. It’s a sector that’s experiencing reliable growth ensuring that buy-to-let properties are still a worthwhile investment.