In the UK, demand for housing has far outstripped supply for many years. This has meant that most of those who got involved in ‘buy to let’ in the late 90s have made very healthy profits.
A recent study carried out by Wriglesworth Consultancy on behalf of Landbay the P2P lending specialists showed just how good those returns have been. In most areas over the course of 18 years buy to let landlords have consistently received a better return on their investment than virtually any other group of investors. For every £1,000 they invested in 1996, a buy to let investor can expect to have made an average of £14,987. In the past five or six years, rising rents have boosted returns.
Leasing agents help to make it easy to be a landlord
All kinds of people have entered the market over the past decade. Many of the people who have bought property and become landlords are ordinary people. In many cases, they have bought one property as a way to save for their retirement.
It has only been possible for private individuals to enter the market with the help of firms like www.linleyandsimpson.co.uk. They are an example of a new generation of leasing agent that tailors their service to meet the needs of all kinds of investors. Whether it is someone with a portfolio of properties or someone with just one property, these new style leasing agents can help. This has allowed ordinary people to get on with their lives and earn the money to cover their mortgage while the agent takes care of finding tenants and managing the property.
The future of buy to let investing
Whether these very high levels of return will continue remains to be seen. In July, George Osborne announced that he was cutting the allowance for mortgage interest tax relief for buy to let investors. Currently how much tax relief investors get is based on their income tax band. If someone is in the 45% tax band, he or she can claim tax relief of 45%. In the future, the level of tax relief will be set at the basic tax rate, which is, currently, 20%.
The change will be phased in over the next four years. It is estimated that overall the change in the rules will cost landlords £6.3million per year.
However, the fact that house prices are continuing to rise in the UK means that investors should still experience good returns. It is predicted that house prices will continue to rise because the rate of house building is still lagging badly behind demand.
In 2014, 15% of the money lent by the banks was in the form of mortgages for people who were buying property as an investment rather than homes. Buying property as an investment is likely to remain popular across the UK. In the current economic climate it is still seen by most as a easy way to make money.