With skyrocketing prices, property investment in the capital is looking very attractive right now. Even throughout the global financial crisis, property in London held its value well. Since its nadir in 2009, property prices have risen sharply, with some London boroughs achieving a whopping 75% uplift in prices in just five years. So even if you only plan to do it for a short while, you should see a good return on your investment.
And it’s not set to stop here, the Royal Institute of Chartered Surveyors (RICS) has forecast that London prices will rise on average 9.1% per year for the next five years and further predict a UK-wide growth of around 6% each year.
And if you’re investing in property, it clearly makes sense to have a regular income from it as well, so buying to let makes more sense than just buying and leaving a place empty; a phenomenon which is creating streets of empty houses, especially in wealthy areas in the capital.
Rent is currently at a high and with many would-be first-time buyers being priced out of the market; demand for rental property is growing. Industry website, propertywire.com says that landlords are feeling much more optimistic about their investments this year, after a few years of low confidence.
This rise in confidence seems to be partly down to more readily available finance – Propertywire cites that the number of buy-to-let mortgage products available has risen from less than 200 to more than 500. Add to all of that the fact that interest rates on buy to let mortgages have dropped recently to their lowest rate since before the recession (see this article on Sky news) and you’re looking at a pretty nice investment.
The other reason for landlords’ higher confidence is the buoyant lettings market. Four in 10 landlords say they’ve seen a rise in demand in the last six months and nearly 60% are expecting demand to increase this year.
A word of warning though, recent changes by the UK Government have seen Capital Gains Tax (CGT) relief changes. If you’re buying to let straight from the off, then there’s no change, but many landlords are ‘accidental landlords’ – people who began by buying a place of their own and then started to let it out after living there for a period of time. Previously if you had lived in a property at any time over the past three years before selling it, you wouldn’t have had to pay CGT. With the new changes though, you now have to pay it after 18 months. You’re allowed to make £10,900 profit before you’re liable, but the way prices are rising, chances are you could well find yourself having to pay CGT. It’s a complex subject worth investigating if you’re worried – see HMRC’s guide to CGT on property.
Nevertheless, now is a good time for landlords and if you have a decent deposit, you could get some really attractive mortgage rates, and with demand as high as it is, you’ll probably find it easy to let your property and keep it let. And if you’re looking at a long term investment, or even buying somewhere you might plan to move into at a later date, then 2014 might very well be the year to buy to let.
Why not get in touch with our expert team to find out more about the options open to you? Check out our website for all our contact details and more helpful information: www.fishneedwater.com.