Is it Still Worth Letting Your Property?

Tax changes, stamp duty increases, Brexit — it’s safe to say that news around buy to let is all doom and gloom at the moment. Many of the property columns are reserved for warning investors off the buy-to-let market, while current landlords are advised to sell up while they can.

It all sounds pretty bleak, right? Of course, news sites need clicks to boost their revenue further, so it’s in their best interests to create a sense of unrest. That’s not to say they are making everything up — the market isn’t in the same fortuitous situation it was a few years ago.

And yet writing the lettings market off is short-sighted, to say the least. Just like any business, those who make the right decisions can still enjoy short and long-term gains. But is letting a property worth the hassle? Is it even a hassle? As we head into 2019, we ask whether it’s still worth letting your property?

The bad news

This wouldn’t be a fair article if we closed our eyes, covered our ears and only spoke about the good parts of letting a property. So first, let’s look at the issues in the industry…

Tax changes

It would be unrealistic to say that everything is cushty in the lettings market right now. The tax changes introduced by then-Chancellor Philip Hammond were seen as the coup de grace to landlords all over the country as well as aspiring buy-to-let investors.

Before 2017, landlords could claim 100 percent of the interest on their BTL mortgage. Since 2017, the claimable interest has dropped. In 2017, it was 75 percent, this year (2018) it was 50 percent, next year is 25 percent, and in 2020 it will be zero percent.

On top of the tax changes, there were further amendments to other tax breaks, which meant landlords could no longer claim a 10 percent for wear and tear allowance. Instead, they can only claim on item replacement, which has to equate to the same amount of the original. For example, if you have to replace a sofa worth £300, you can only claim £300 back on the new sofa when filing your return.

Stamp duty increase

The stamp duty surcharge of three percent imposed on buy-to-let investors with two or more properties didn’t help either. Those thinking of entering the buy to let industry or increasing their portfolio were suddenly left with having to find a bit extra.

It’s not all doom and gloom

Ok, so we have gone over the bad news and the roadblocks that have shifted the lettings landscape. How about some good news?

Demand, demand, demand

The private rental sector is growing in influence in the UK property market. By 2021, it is estimated that a quarter of UK households will be rented privately. The government can’t build affordable homes at a rate that keeps up with demand. As a result, more people are renting.

In major UK cities like London, the number of people renting is higher than those who own. By 2025, the capital’s renters will outweigh homeowners 60–40 percent. The rest of the UK’s rental sector is also growing and has more than doubled in size since the year 2000.

It’s clear to see that there is demand, and like any business, where there is demand there is an opportunity.

Rising cities offer new opportunities

For many years, London was viewed as the holy grail in the rental market. It was the place everyone wanted to be and saw investment from all over the world. While it still holds plenty of weight, other cities have emerged, offering high yields and lower purchase prices.

The regeneration of Manchester has seen many professionals flock to the area, creating plenty of demand for rental accommodation. Other cities like Birmingham, Nottingham, and Liverpool have also seen a growth in the PRS.

A changing rental landscape

The traditional ways of letting are being challenged, with many forward-thinking companies creating easier ways to let property. Here at Mashroom, we are part of that sea change and are building a community for landlords and tenants to work together with the aim of providing more transparency and a smoother lettings process where everyone is rewarded.

If you’re a landlord heading into 2019, there are plenty of reasons for optimism. If you are in it for the long game, take an invested approach in your tenant -who is essentially your customer — and pick the right platform to let your property, the answer to the question is yes, letting property is still very much worth it.

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