Despite negative press reports and the anticipated changes in the forthcoming Rent Reform Act, there are still compelling reasons to be a landlord in the private rental sector, says Alasdair F Morrison, Chartered Surveyor and Senior Partner at Alasdair Morrison and Partners.
Firstly, capital returns are good, albeit not guaranteed. New figures from the Halifax show that average UK house prices grew by 20.4 per cent between January 2020 and December 2022. I doubt that same level of growth will be seen in the next three years, but long-term capital appreciation has been consistently good for bricks and mortar.
Secondly, rental returns have been strong especially in high yield areas. I estimate that a Newark property bought in 2017 for £150,000 would have generated over £54000 in rental income over the past six years, and that is notwithstanding a capital appreciation of over £50,000.
Thirdly, there seems little prospect of rental demand slowing significantly, as housebuilding levels are low, especially for affordable housing.
Fourthly, would-be property investors still have the option of owning buy to lets through a company to minimise their tax and overheads.
Finally, landlords can genuinely feel they are contributing to the shortage of accommodation in the private rental sector by providing a home. Despite what you might read in the national press, this is not the landlord-tenant battleground some people claim it to be.
Yes, there have been and will continue to be various tax and regulation changes which will lead many to question the financial viability of buy to let. In addition, some campaigners and charity activists have tried to paint landlords in a negative light. This may seem unfair as the private sector provides valuable and typically good quality housing to tenants wanting the flexibility of renting.
In my experience, buying the right property in the right place, with a target tenant in mind, can still be financially rewarding, despite a growing tax burden and more regulations, says Alasdair.
To discuss this article, or for further information on becoming a landlord, please call Alasdair on 01636 813971. Alternatively, you can speak directly to our Rentals team on 01636 670977.
