General misconception in buy-to-let

There seems to be a misconception in the buy-to-let space at present that no new ‘landlords’ are entering the sector and that it’s purely the preserve now of the established, professional landlord with at least half a dozen properties to their name.

Of course, we have seen a growing ‘professionalisation’ of buy-to-let and this will continue but this doesn’t mean that new landlords are not eyeing up the opportunities that exist, particularly in what can now be described as a ‘soft’ housing market.

What we have seen however – and this is clearly down to the PRA lending changes, the tax changes and the increase in stamp duty for the purchase of additional property – is that the “get rich quick landlord” has been put off because this is a market which cannot deliver that type of short-term reward anymore. Indeed, while it hasn’t for some time, the recent regulatory and taxation changes make this impossible.

Creating such barriers for those who might ordinarily think property was the route to a quick return is no bad thing of course. It also means that the “next generation" of landlord is much more likely to be in this for the long-term, and to expect to have to wait a considerable amount of years to, for example, see capital values grow and to benefit from rising rents.

Again, no bad thing, and what we’ve found is that new entrants are better informed than they have perhaps ever been – they have conducted their research about the property, the area, the demand, the likely tenant, and they’ve also having to make a considerable financial commitment in order to purchase the property.

A 25% deposit plus stamp duty and all the other fees that come with purchasing is never going to be “small change” and therefore this is a real commitment from serious investors, with a long-term horizon and already a good idea of how they might want to add to their investments/portfolios, and also how they might want to eventually exit them.

That’s a hugely encouraging sight to see, and the fact that many of these new landlords are utilising limited company vehicles in order to make those purchases, also tells us they are well-advised and taking advantage of what (in all likelihood) will be a better tax position.

If you are looking for a new or re-mortgage please do make contact and one of our qualified advisers will be happy to assist.