With house prices in parts of the country remaining high and the UK’s housing shortage ongoing, many young people are failing to get on to the property ladder until they reach their early 30s. At the other end of the scale, more people of pension age are separating and becoming tenants rather than homeowners. This means that renting at any age has become much more mainstream.
This market opportunity was seized upon by buy-to-let landlords. However, investing in buy-to-let has changed a great deal over the last few years. Landlords have found themselves facing cuts in mortgage interest tax relief and changes in stamp duty on second homes. In addition, buy-to-let mortgages have become slightly more difficult to obtain since the introduction of new lending criteria by the Prudential
Regulation Authority. However, many landlords are choosing to stay in the market as they view the returns they are getting as worthwhile when compared to other forms of investment.
New avenues being opened up With the mortgage interest tax relief changes being introduced in stages until full implementation in 2021, some landlords are purchasing in, or transferring their properties to, a limited company as a means of lessening their tax burden.
Others are looking at alternative rental models, such as Houses of Multiple Occupation, where a property is rented out on a room-by-room basis to individual tenants. Using this model means a landlord can often charge a higher price per room in comparison to the market price of the whole property.
Whilst today’s would-be landlords may be warier about entering the buy-to-let market, the fundamentals of investing in bricks and mortar remain strong. Commentators view the market as having undergone change, but very much alive and kicking.
Buy to let mortgages are not regulated by the Financial Conduct Authority.
Tax treatment depends on individual circumstances. Tax treatment, rates and allowance are subject to change.
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