Wednesday 21 February 2018

Buy-to-let property predictions for 2018

Author: Andrew Page

Buy property to let

There’s no denying that 2017 was an interesting year for the buy-to-let market. New rules and regulations have altered the taxes paid by landlords. Many commentators saw these changes as a turning point for a once-buoyant industry. With further developments slated for the coming months, 2018 looks set to be a turbulent year for those in the buy-to-let business.

So what exactly do the next twelve months have in store for landlords in the UK? We did a little educated guessing to come up with our top buy-to-let predictions for 2018.


First time buyers will be big competition

Up until recently, buy-to-let investors had an advantage over first-time buyers when it came snapping up properties. Buy-to-let mortgages were relatively easy to get and high rental incomes made it possible for prospective landlords to take out fairly decent loans.

Banks have now tightened up their affordability checks, making buy-to-let mortgages that little bit harder to come by. In addition, in November 2017 the Government scrapped stamp duty for people buying a first home up to the value of £300,000. This change will put a lot more money in the pockets of first time buyers and could make it harder for buy to let investors to snap up homes. As @HomesProperty says:

“With the average first-time buyer home in London now costing £479,000, according to estate agent Savills, the relief cuts the stamp duty bill by about £5,000.”

Houses will become more expensive

A side effect of the stamp duty relief given to first time buyers is that property is likely to get more expensive in 2018. As the Chancellor has effectively put more money in the pockets of first time buyers, they’ll be able to put down bigger deposits and so secure larger mortgages. Some experts predict that this alone could raise the cost of property in the UK by 0.3%.

Rents won’t rise – much

For years, rents in the UK only went one way: up. However, with wages remaining stubbornly stagnant for many UK workers and living costs on the rise, landlords are beginning to find that they can’t squeeze tenants any further.

In 2017, the average rent fell for the first time in seven years, dropping 0.3% between May 2016 and May 2017. This means that landlords looking to invest in buy-to-let properties need to be aware that the earning potential of their portfolio may not increase at the rate we’ve seen in previous years.

If you’re considering investing in the buy-to-let market and want high quality, reliable advice on making the most of your finances, we can help. Get in touch with a member of our team to find out more.

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Written by: Andrew Page