As yet, the shock impact of Brexit is yet to be fully felt in real terms across the country and wider world.
Just as the story for the UK unfolds, it's important that we all start adjusting our strategies according to what is presented to us. In my case, each time something changes I review my strategy for my personal property portfolio and reassess the materials in my property education system
I have been contemplating what these changes mean for the property market and more specifically, for landlords and investors both new and experienced.
So, what's changed?
Quite a lot. Namely the changes in tax law for landlords announced last year, an extra 3% surcharge on SDLT (Stamp Duty Land Tax) introduced in April this year for people buying property for investment, stricter criteria being introduced on BTL lending and much more 'Landlord' regulation than ever before.
You may well ask, 'Is this the end for Buy-to-Let?' After all, why on earth would anyone want to start (or continue to build) a property portfolio with such onerous obligations imposed upon landlords?!
But it's not all bad news. It never is.
Having been a landlord for the past 15 years, I have witnessed many changes in the property business. I come across many people who would like to get into Buy-to-Let, but are afraid of all the noise and opinion that threatens to overwhelm the realities of being a property investor - to the point that they just don't know where to begin.
I remember that feeling, too.
Fortunately for me, my fiance and I managed to keep up with the buy-to-let rush at the turn of the millennium. From the early 2000's, with house prices charging in an upwards-only direction and money being freely given out by the lenders, it really was a heyday for the industry.
But fast-forward a few years and buy-to-let skidded to an unwelcome halt as the recession hit.
We all learned a hard and painful lesson - nothing lasts forever. The seemingly bottomless pit of money to be made from buy-to-let dried up, as did all other sources of income. Many went bust. Repossessions were at an all-time high, equity was wiped off in swathes almost overnight and the rollercoaster had taken a serious nose-dive.
For those landlords who survived (of which I am very fortunately one), it told us that this business was not an easy ride, certainly not as easy as it had seemed in the boom times. It also showed us that property investments are not guaranteed to go up in value. Indeed, the economic slump allowed many landlords to learn about the true business nous that only comes from the tough times.
And here we are today - and the obstacles are far smaller than they were before
Fortunately, the same lesson applied; nothing lasts forever. The crisis softened, the recovery began. Landlords have come a long way since 2008, where our entire economic future was thrown into jeopardy. In some ways, 2016's changes in buy-to-let show how resilient and successful it has proved to be as an investment strategy.
After all, can it honestly be any harder than the recession?
Taking into account all the current uncertainty and the new roadblocks which have come into our way as landlords, I do still believe wholeheartedly in this business. I am still optimistic about the future of the UK property market and in the PRS (Private Rental Sector) as a landlord. The next era of buy-to-let will actually be a siphoning stage - a period of really sorting out the wheat from the chaff.
The question is - which category will you fall into? Fortunately, even with everything I have mentioned above, there always will be ways for you to win with property.
If you are serious about being a landlord, then read on...
Regardless of the fact that there appears to be a seemingly relentless onslaught against private landlords at the moment, there are still plenty of people who believe that property is a sound place to put their money. The tangibility and control factors that property brings, as well as a very healthy historical upwards trend in house prices, are reason enough for many to buy property as a means to supplementing their retirement funds. For others it is means of establishing a good, solid business.
Taking personal responsibility for your financial future is a step that few are willing to truly embrace, but for those who do, the rewards are sweet.
Below, I have listed a few pros and cons to take into consideration about being a part of the buy-to-let industry. Whether you are an experienced landlord or a novice, have a think about what is going to be right for you.
- Property is still seen as one of the best places to invest money
- It is tangible, with limited supply vs. continued healthy demand
- Even in 'Brexit Britain', I believe the property market will remain strong
- Ability to create decent profits if you do it well
- You have the option to leverage your money
- You can sell as and when you choose to (if you have bought well!)
- Raising finance is still highly viable for many people wishing to enter the Buy-to-Let market
- Building a portfolio over the mid-long term can still create exceptional wealth for you and your family in years to come
- Purchasing property within a Limited Company could offer a way around the new Mortgage Interest Relief restrictions being introduced next year
- High possibility of increased rents due to squeeze on the market
- More people 'exiting' the market due to their unwarranted fears, thereby giving more opportunities to those willing to go the extra mile
- A number of different strategies can be employed when working with property, not just Buy-to-Let
- More legislation and regulations than ever before
- New tax implications coming into effect for individual landlords with addition of Mortgage Interest Relief restrictions next year
- Additional 3% SDLT surcharge on purchase of any additional properties
- Stricter lending criteria being introduced on BTL mortgages
- Possible (slightly) higher interest charges on properties held within a Limited Company (though better tax implications for many)
- Council tax charges on empty properties
- No longer viable to buy in a 'traditional' way - increasingly important for you to gain more knowledge and become creative in your business
- Some fear and uncertainty around Brexit and the impact this may have on the property market
Bearing all of this in mind, now more than ever, you will need to educate yourself in a better, more informed way to counteract the relative complications of being a landlord/investor.
With change comes opportunity. If you have the right knowledge, skill set and determination, you can and will succeed.
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Here's to your property success. Wishing you all the very best.
Hazel de Kloe
Property Investor | Property Mentor | Speaker | Author
The contents of this article are for educational purposes only and we make no recommendation of any particular property purchase. The price of property can decrease as well as increase and you make any purchases in property at your own risk.