Landlords - April Is Looming, Stick Or Twist?

Landlords - April Is Looming, Stick Or Twist?

With the stamp duty changes on second homes looming large and the adjustments to interest rate relief - now more than ever it is sensible to ask the question "Should I sell up now take my profits and re invest in other sectors?" Or, "should I try and get as many buy to let properties before the proposed stamp duty changes come into force?"

Rob Hill, Director of Greater London Properties, an estate agency based in the capital, gives his opinion on what to do when the stamp duty changes come into effect.

Rob says; "The additional stamp duty levy of 3% on second homes, coming into force from April, is designed to raise more money for the treasury (estimates suggest as much as one billion pounds by 2021) and to slow down the drastic price rises in London to try and assist generation rent get onto the housing ladder.

Only time will tell how this plays out but in my opinion it will undoubtedly raise more money for the treasury but will fail miserably to help first time buyers get onto the ladder.

We, as a nation understand property and in London we know that the right properties will always rent well and rise in value.  While many understand the stock market it's not for everyone and with the current volatility investors globally and nationally view London property as a safe place to invest and something that you can see, touch, design, build and add value to by improving.

So why do I feel the new duty will fail? Serial buy to let investors who traditionally bought more expensive properties will continue to invest but will move into the market for cheaper property.  Property investors are ultimately lead by capital gain, yields or a combination of the two.  Many have a preference to the area or property types they know best but if entry costs alter so dramatically, its logical for other areas to be explored be it a different location or cheaper properties in their preferred location.

The majority of vendors we deal with are most interested in achieving the best possible price with the minimum fuss for their property.  If they are presented with two similar offers one being a first time buyer and the other being an established investor in most cases they will favour the investor. After all, they have been there done it and got the t shirt, the purchase is less emotive thus less likely to fall on stony ground.

What will the impact of the interest rate relief for second homes be on the market? This is perhaps the most contentious policy in property since the proposed mansion tax. Many feel it's wholly unfair that taxes should be paid on a legitimate cost to a business while others feel “that the rich second home owners should be taxed”. Whatever your thoughts it is something that needs to be carefully considered. These changes are being phased in from 2017 and even then on a sliding scale to give investors time to adjust until tax year commencing 2020.

Cherie Blair is leading a challenge to the European Court of human rights to have this policy thrown out.  Only time will tell if she is successful but it's a bizarre turn of events, the wife of a former Labour Prime minister challenging a conservative policy that is so popular with Labour supporters.  It could leave both the Conservatives and Labour party with bloody noses.

So should you stick with what you have or twist and either buy more or sell up?  Opinion on this is divided.  Many of you are scrambling to buy now to save on the stamp duty, a fact not lost on a number of vendors.  The effect of this is that many more instructions compared to recent years have flooded the market in the winter months. A considerable number of our clients are telling me that they plan to “keep their powder dry” and see what the fallout of the changes is and to see if there are savings to be had due to the market perhaps running hot in the scramble to save on stamp duty.

My advice when investing is to stick to the cheaper properties in the best area you can afford. Small properties in Central London will always experience strong tenant demand and should be the best performers in terms of quick capital appreciation as more investors move into this bracket driving up prices.

My tip for good capital gain and a stable rental return is to look to north Bloomsbury and the Kings Cross area. This is an area that relative to its neighbours is far more affordable, has substantial rental demand due to its proximity to the West End /City the universities and plentiful squares.

The improvements made in Kings Cross St Pancras for Euro Star and HS1 drastically changed the area forever and demand and values have significantly increased. The recent Government sale of 67 acres of the land behind Kings Cross to AustralianSuper for an eight million square foot mixed use development and the ongoing looming prospect of HS2 will mean further changes are afoot. I believe firmly that the changes in the area will acerbate so much so that  I have put my money where my mouth is and am delighted to announce that we are opening our second office at 65 Judd Street in April of this year to service this growing demand."

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daniel black
daniel black 25 Oct 2016

I've been keeping a close eye on what the effect of Brexit has been on the rental market and it's a very mixed bag. Whilst the majority of the news focuses on London's market. I think this time next year...

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Northerner 20 Oct 2016

Any views from outside the M25? No wonder politicians can't get the housing big picture when everyone seems to think that London is the yard stick, when it absolutely is not.

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Sean Lees
Sean Lees 13 Oct 2016

I think that the pest control really depends on the situation. If the tenant moved in and found an infestation that needs pest treatment service, I think it's more reasonable that the landlord should pay...

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Kevin 13 Oct 2016

Please Sian Berry Dan Wilson Craw LANDLORDS DO NOT WANT TO RAISE RENTS They are being forced to because of Section 24! An unfair, punitive tax hike that will be a disaster Green Party, Generstion...

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Fletcher88 11 Oct 2016

Absolutely agree! Moreover property prices edged up with 0.7% this month as the market recovered from the initial Brexit hit

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Gary Das
Gary Das 06 Oct 2016

A lot of lenders (especially the high-street banks and lenders people approach first) could do more to accommodate for the self-employed. It can really be a struggle, as I found out myself last year when...

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richardrawlings 04 Oct 2016

Not sure I understand this! If Basildon and Hemel rose 68% and 52% respectively, why do they not appear in the top ten list, which appears only to feature those in the minus 20's!! Is it me?

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luxus 27 Sep 2016

It can be stressful. More clarity is needed on the process, from a customer perspective and consideration should be given to using the Scandinavian model where the sales process is much quicker.

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Melissa_Green 26 Sep 2016

Green belts are normally designated around capitals and other major cities and conurbations and their aim is to prevent urban sprawl by keeping land permanently open. The essential characteristics of green...

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Jimmy_McCoy 16 Sep 2016

I think that the main reason to buy garden purchases in last minute is because people always search for the best deal. In summer months there are abundance of seasonal goods and it means more low cost

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Jimmy_McCoy 16 Sep 2016

Buying a home often is more expensive than you expect. There are lots of hidden costs such as: stamp duty, surveys and valuations, mortgages etc. that can add more than 10% to the total bill

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We are seeing a massive influx of Homebuyers using online Estate Agents. The winners are the online portals that still aim to manage the customer journey to homeownership. They provide a valuation service,...

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