There hasn’t been much good news of late for property investors. Hardly a month has gone by without further announcements designed to reign-in the sector. At Martin & Co Plymouth we remain upbeat and believe there are compelling reasons to continue to invest in the market.
1. Property Liquidity – Annual property price inflation within Plymouth ended the year at 5.0%. Prices elsewhere in the UK may have increased at a faster rate but have been artificially elevated by a paucity of supply. Properties sold in Plymouth by contrast have increased year-on-year since 2007, meaning that price increases here are likely to be more sustainable. Those already on the property ladder are the clear winners. Increased equity will allow investors to switch to more affordable mortgage deals. For those considering entering the market, but dissuaded by increased SDLT, an annual rise of 5% in 2016, would return this cost as equity in the property within 8 months.
2. Increased Rents – Newly released analysis has suggested that rents for freshly let homes in Devon increased by 4.1% during 2015. At this rate of increase on the average property to rent (£753pcm) in Plymouth, that’s an additional £370 per year. Whilst this may not completely cover the tapering of interest relief on BTL properties, it will certainly take a good chunk out of it.
3. Interest Rates – Even before the announcement from Mark Carney this week, it had become evident that interest rates were extremely unlikely to be raised any time before Q4 2016. Commentators are now suggesting that global headwinds are making any rise unlikely before mid-2017. This is clearly good news for property investors on variable mortgages, who will enjoy the seventh year of rock-bottom rates.
4. Business Mortgages – The Chancellor’s announcements on SDLT and tapering tax relief has led many to consider the implications of registering their properties as part of a limited company. Mortgage lenders have been criticised for costs associated with business mortgages, but with increased competition in this area, lenders are already driving rates down to win business.
5. Demand - The Office National Statistics (ONS) are forecasting significant growth in the UK population in the next 15 years. Whilst the government have committed to an uplift in house-building, it is difficult to fully understand how this can translate into delivery. There will be room for both Build to Let and Buy to Let to co-exist as demand continues to outstrip supply.
Landlords and homeowners wanting to discuss their property investments are welcome to visit our offices on Mutley Plain, visit our website.