Buy-To-Let Properties in London Can Be the Smartest Investment Ever

Willing to buy a property London? A few things should concern your attention before proceeding.

Buy-To-Let properties can be a lucrative opportunity for investors in London amid suppurated property prices, the pesky percentile of taxes, and political incertitude.

Whether investors or people who want to expand their existing portfolios, both are willing to enter the sector. A profitable incongruity between the decreasing rental supply and the upswing in demand combined with stalled purchase prices are the cause behind it.

These can make you think about whether it's a good option to chase or not. Well, you can read this UK Property - Are These Still A Good Investment? to gather some information on this.

According to an April 2019 report from a renowned UK property portal Rightmove, rental inventory is dramatically shrunk in the capital with a number of 33% down from the start of 2017.

Supply has been decreasing as current landlords started listing out their Property to buy UK. It happened in response to the aforementioned taxation and regulations that were implemented in the lettings sectors. At first, there was a gradually disappearing tax relief.

In April 2017, the UK began increasing taxes on landlords effectively by phasing out a deduction on the mortgage interest of the buy to let properties.

Since then, the deduction has been lowered by 25% every year and will be positively eliminated next year.

It has come after a 3% increase in the stamp duty tax for additional and the buy to let property purchases, which were introduced in the year 2016.

According to an April report of Knight Frank, the buy to let mortgages issued in the UK was roughly 40% lower compared to what it was before the surcharge of the stamp duty.

“The type of landlords who are exiting this buy to let property market is largely the small, private investors and also the accidental landlords.” - by Catherine Westerling, National Head of Lettings At Hamptons International.

However, these exits are helping in boosting demand while accompanying the increasing rents. Overall, it's helping the market becoming a good prospect for people who are willing to invest or expand.

According to Catherine Westerling, the prices have probably softened enough to counterbalance the additional taxes, which current landlords are facing regularly.

Reason Behind The Increasing Demand

There are various factors behind the increasing demand and this includes affordability first.

For most of the Londoners, homeownership is out of reach and landlords are also leaving the market. Both of these situations have never helped the market anyway.

Moreover, contributing to heightened demand of rentals is the political uncertainty leading some to quit the idea of purchasing.

A large number of tenants who are registering with the real estate agencies have jumped up with 34% in the year to March. And this entire process is only increasing the rental prices.

The sparse amount of stock available clarifies that there are 14 aspiring tenants who are registering for every single buy to let already listed property.

The demand has risen overall including all price structures, property sizes, and in all areas. Wherever the demand is out pacing the supply, then you are fencing your stakes for the plausible buying options.

Rental Values Are High

The gap between two metrics has widened and because of that rents in London have reached a record height. However, capital rents have increased by 8.2% annually within the first quarter of the year.

The average rental property is going for £2,093 (US$2,653) per month according to Rightmove. This increase was marked as the highest annual rise since the portal began tracking information in 2012 and the gains will continue.

According to Savills, over the span of the next five years, letting values will continue growing by 11.5%.

The value to be found in purchase prices beyond the increase in monthly prices.

Within the first three months of the year, property prices were 3.8% lower compared to the same period in 2018. This is considered to be the fastest pace of decline since the year 2009 and also known to be the seventh consecutive quarter that brought fell in capital prices.

Keeping London’s softening prices in mind along with the result of stamp duty changes, and Brexit, it can be said that “this is the best time to buy”.

If I had enough money now to spend, would I buy a property in London? Definitely.