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Is it still a good time to be a Landlord?

In the past year this is a question I get asked regularly, mainly due to the increased level of legislation faced by landlords and their properties, and more recently due to the speculation on the changes to Capital Gains Tax. Both these things have led to landlords reconsidering their investments and whether to leave the buy to let market all together.

Having read numerous reports from various sources over the past couple of months, the indications are that property remains a good investment, particularly in areas like the Wharfe and Aire valleys.

Here are some of the reasons why: –

The results of the latest ARLA-Propertymark Private Rented Sector (PRS) survey is a good place to start.

Increased Demand – even though we have been in lockdown 3.0, the ARLA survey results show an increased number of applicant activity. The average number of new prospective tenants registered per branch soared from 64 in December to 81 in January. Year-on-year this is marginally lower than (pre-pandemic) January 2020 when the number of prospective tenants stood at 88.

Regionally, Yorkshire & the Humberside had the highest number of new tenants registered per branch with an average of 138. So strong demand in our areas.

Increasing Rent Levels – the ARLA-Propertymark survey shows rents continuing to rise. The number of tenants experiencing rent increases rose in January as two in five (39 per cent) agents saw landlords increasing rent compared to 30 per cent in December. However, year-on-year this figure is down slightly from 42 per cent in January 2020.

Tenants Swap Cities for Suburbs – recent Rightmove statistics shows there was less good news for landlords of properties in large City centres, where asking rents in some of the UK’s biggest city centres saw annual falls of up to 12% in the last quarter of 2020, as some tenants swapped centres for suburbs. The number of rental properties on Rightmove more than doubled in some city centres, with the biggest jump in Leeds (+179%). I think this a trend that is set to continue, with more and more people continuing to work from home. The areas around the Wharfe and Aire Valleys will continue to be popular, due to the variety of accommodation available, set in greener open spaces.

House Prices are Predicted to Rise – The latest figures from the Halifax and other experts, indicate that house prices will remain steady in 2021, following rises in 2020. The extension of the stamp duty holiday in the last budget and assistance for borrowers with lower deposits, is expected to give the property market another boost in the short term. The Office for Budget Responsibility (OBR) had predicted a fall in house prices, when the stamp-duty holiday was to be withdrawn at the end of March. However, following the Chancellors announcement of an extension to the stamp-duty holiday, the OBR now supports the view that values will rise a little in the short term due to the increase in transactions and will then stabilise later in the year.

As for Capital Gains Tax (CGT) there was little mention of CGT in the Budget. Which has prompted speculation of lengthy consultation and potential changes to tax rates on the so-called “Tax Day” proposals on March 23^rd.

So, what conclusions can be drawn from all of recent reports and commentary? Is it still a good time to be a landlord? Well, I have concluded that, compared to other forms of investment, with stable property values and rising rents and demand property for buy to let landlords still remains a relatively safe and sensible place to invest your money.

For all aspects of property investment advice and information, giving you the low-down on local areas, expected rents and anticipated yields too, call Brian on 01943 328343 or email: brian@whitakercadre.com