The Slump In The UK’s Housing Prices and Mortage Market Means There’s No Better Time To Invest
It has been a difficult second quarter of 2018 for house prices in the UK. With London’s housing market suffering its first slump since 2009, it has contrived to drag down the rest of the UK and have damaging effects on house prices and mortgages up and down the country.
Growth in London house prices fell to 4.4% in the year to February 2018 and while it is different from region to region, annual price growth fell to 1.4% for July 2018 and down further from 1.7% in the previous month.
The slump has been caused by a flood of properties on the market, and without the expected numbers of potential buyers looking to snap them up the market has depressed accordingly. July saw an increase of 8.6% of available properties. As a consequence, both mortgage approvals and completed sales have taken a tumble as would-be buyers are turning their back on the market in their droves.
The gloomy outlook and forecasts come despite efforts from the government to stave off the problem. Chancellor Philip Hammond’s idea to abolish Stamp Duty for first-time buyers on homes over £300,000 has failed to ignite a spark. The Chancellor’s intention to incentivise first-time buyers to put the money saved from Stamp Duty toward a deposit has failed to materialise its desired results.
With the market for UK house prices and mortgage approvals more jittery than ever there could not be a better time to invest in the buy-to-let market. Many home owners are even refinancing their homes with the idea of property refurbishment on their agenda. With interest rates still low and a surfeit of potential tenants spooked by the mortgage markets, the time is right for potential buy-to-let investors throw their hat into the ring.
Bricks and mortar have always presented a safer and more satisfactory investment than the wild swings of the stock market and with many properties offering great returns and high yields, particularly outside of London, the prospective gains from buy-to-let property investment and mortgages may be too great to ignore.
From students to young couples to professionals, the range of potential tenants for a buy-to-let property investor means that that their properties will be the subject of much continued interest. Many buy-to-let properties in regenerated areas in the North of England are bringing 6-8% rental yields as standard. As rents tend to rise with inflation, the long game played by the Bank of England regarding interest rates means those yields will stay steady and potentially increase over time.
But caveat emptor applies for those looking to invest in buy-to-let properties meaning that now is the best time to consider an investment. Even with an extra 3% stamp duty on landlord’s property purchases there is more than enough positives inherent with long and short term property investment.
Stamp duty can be a complex issue for new and experienced buy-to-let property investors. More information can be found here: https://www.rw-invest.com/stamp-duty-calculator/
There are also plans to replace buy-to-let mortgage relief with a 20% tax credit. Yet as with the increase in stamp duty, the benefits of forging a path into the buy-to-let property investment market far outweigh any negatives.