As Oxford-based builders we are always keen to keep an eye on what local property experts are saying about the Market. The Oxford Times property column always has some great insight from other property professionals including this piece from Jeremy Turner of Turner Properties, published in April 2017, that highlights the competitiveness of the buy-to-let market especially where student accommodation is concerned. It also mentions the change in standards and yields investors can expect from well- renovated student accommodation, an area Oxford Builders are particularly well-experienced in.
Are we suffering a buy-to-let depression?
From the 6th April the new UK buy-to-let tax changes will come into effect and already we have seen the UK’s buy-to-let property market take quite a hit due to the changes the government has made in recent years.
Last April the government added 3% to Stamp Duty which meant that buy-to-let’s produced lower yields literally overnight and the scaling back of mortgage interest tax relief from 6th April 2017 is also expected to have an impact.
Jeremy Turner of Turner Properties comments on what this tax change will mean to those looking at making a future investment in bricks and mortar.
“The UK buy-to-let market has displayed an impressive level of resilience in the face of these recent blows. Despite the tax changes and impact of the Brexit referendum last June, I don’t think that Investors have lost but are certainly facing tougher challenges financially. Interest rates from mortgages have impacted buyers but deals that are being offered this week such as a 2 year fixed 1.44% with Santander or a 5 year fixed 2.33% with Accord are enabling investors to secure a buy- to- let mortgage.
Due to the low yields available in this part of the country, properties that are leveraged at 60 per cent, loan to value, are barely breaking even. Thus, landlords are exposed to interest rates and the potential negative cash flow situations. Add to this tax changes which will reduce the tax efficiency of an investment for anyone earning more than £50,000 per annum if the investment is in their name, and you have quite a few reasons to avoid investing now.
I am a great believer that Student housing is perhaps the most established rival to buy-to-let in the UK when it comes to grabbing real estate investors’ attention. Modern, stylish student accommodation Investors can enjoy yields of circa 6-7% NET, students experience a standard of living that would have been unimaginable just a few years ago.
Without doubt, buy-to-let investment opportunities are harder to come by which will give you higher yields and I am sure it will get harder for several more years to come as mortgage interest tax relief continues to be phased out.”