Is buy-to-let still worth it

Buy to Let and the PRS has been decimated over the recent years thanks to Section 24 and the endless regulatory changes and fleecing fees. Safe and property housing for tenants is one thing but when the Government have strangled it with potentially unintended consequences this is another matter. Local Governments are on the verge of bankruptcy which is largely down to an increase in temporary housing costs and no rental property. It's not like they haven't been told by those in the know either. Sad times for all and some of the most vulnerable in society.

For the experiecned landlord, they are well invested in the market and will feel they need to continue with their business plan. Short term high rates hopefully can be covered by higher rent and cash reserves if adequate planing has been made. But for those relatively new to the idea of becoming a landlord, the many perceived benefits of property investment are now lost, and margins are so tight that there is little financial upside to letting. The government could change direction and allow full interest cost offsetting against profit, that will make a huge difference and give some basic profitabilty back to the landlords. Given how reliant the government is on private rented market for its own housing strategy, it baffles me that they desperately need those private landlords, but then penalise them financially in the same breath.

Buy to let is not as attractive as it once was. The taxation changes and increased regulation have suffocated the market and now increased interest rates and the impact that has on landlord affordability calculations are further impacting the demand. However as a long term investment and with properties with higher margins such as holiday lets and Houses in Multiple Occupation (HMO) buy to let remains attractive.

Ever since George Osbourne announced the changes in what landlords could offset against the rental income that they generate plus the introduction of second property stamp duty in 2016, this has pushed the cost of owning a buy-to-let property even higher and making a return harder to achieve. This has seen a decline in people wanting to take on a buy-to-let property, given the smaller returns that they would generate for the initial and ongoing cost. Add to this the increased rates that landlords have to factor into their calculations, this makes buy-to-lets even less attractive to potential investors. Landlords would like to see an incentive or assistance in what has been a very challenging time for all mortgage holders, maybe the ability to offset some of the increased interest costs would be well received however this may not be in the government's thinking with a potential election around the corner next year.

Property is a type of asset where the focus should be on duration rather than timing. For those considering property as a component of their portfolio with a long-term perspective, it can still be a valuable addition and there are always deals to be had. However, individuals expecting rapid and significant appreciation in value over the next few years may find themselves disillusioned.

The buy-to-let market is most definitely still worth it, particularly for those who are focused on long-term growth rather than short-term gain. The inherent lack of housing in the UK and suitable local authority provisions means that there is an ever-increasing demand for private landlords. There is more of an interest in purchasing through LTD companies than in personal names for a variety of reasons, mainly taxation, but as long as landlords do their research and ensure the more stringent lender rental stress tests work, there is certainly a market for buy to let. Furthermore, the recent rate reductions are ensuring that we have started to receive more enquiries across our desks.