The residential buy-to-let sector saw a raft of changes last year and we’re probably all well aware by now that there are more to come this spring.
Despite the changes, the sector has proved to be resilient, with the demand for buy-to-let mortgages still very apparent. At Together, we saw strong performance in buy-let-lending in 2016, and June was a record month for us in this sector, despite it being in the immediate aftermath of the increased stamp duty.
As further tax changes loom, there are various ways that investors are choosing to navigate the changes, including buying through limited companies and restructuring property portfolios.
According to data from auction house Allsop, many investors are now turning to commercial property, instead of residential. The property firm has found that there has been a threefold increase in the number of investors purchasing commercial spaces such as shops, restaurants and offices.
Historically, investors chose to buy-to-let residential properties, since house prices traditionally rose year-on-year. The value of commercial properties hasn’t seen the same consistent growth, although rental yields are higher on average, which is why some investors are looking to commercial property to retain their profits and avoid what many regard as punitive tax changes.
Ultimately, there are still plenty of options for investors, which is why we aren’t seeing landlords rapidly exit the market. Low interest rates and a shortage of housing supply is currently counterbalancing the tax changes, and neither of these factors are likely to change in the coming year.
It will certainly remain a talking point in the year ahead, and we’ll be interested to see how things evolve.