Buy-to-Let has been a mainstay for UK property investors for many, many years now, but the recent changes to tax breaks and stamp duty has had a negative impact.
It is the belief of many UK landlords that margins are getting to tight making it harder and harder to make a decent profit, coupled with the fact that a large proportion of landlords are dubious about their ability to maintain tenancies, and thus the ability to keep a steady rental income flowing in means landlords in their droves are giving up the game as it is seen as too much hassle for the profits.
This was not always the case as landlords over the past couple of decades were investing in the time of a “golden age” of UK property investment.
BTL has played a large role during this time in the UK property markets.
“From 1996 to 2013, the total number of dwellings in England increased steadily from 20.3 million in 1996 to 23.3 million in 2013. Much of this was due to the notable growth in private rented housing which more than doubled in size from 2.0 million to 4.5 million over this period.”
Thus 2.5 million out of the 3 million increase was thanks to the PRS. That is 83%.
In 1996 the UK population was 58.2 million. By 2013 it had increased by 5.9 million to 64.1 million, while the number of dwellings only increased by 3 million.
Many people mistakenly blame BTL investors for over-priced property in the UK today.
Contrary to the common belief, BTL did not cause much of the rise in prices. . The National Housing and Planning Advice Unit (NHPAU) stated in 2008 that the BTL sector was responsible for increasing average house prices by 7% between 1996 and mid-2007 (when the housing market ground to a halt) but that average house prices rose by 150% in real terms during this period.
So BTL was responsible for one-twentieth of the increase.
So maybe the rise in stamp duty and the cut in tax excemptions will only serve to further increase the housing shortage in the UK, and also make it harder and harder the average hard working UK landlord to put his money to work.
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