The start of the new tax year brought some important changes for prospective landlords to be aware of. Firstly a new surcharge on purchases of investment properties was introduced, adding 3% to the cost. A reduction in tax reliefs was also announced. From next year it will no longer be possible to offset all of the interest on mortgages against the tax bill, resulting in rising costs. Lending controls also are expected in order to even the playing field for first time buyers.
These changes can have a big impact on investors, but in London the huge house prices and strong demand for homes will still prove to be a major draw. However, this does mean that prospective investors will have to be more careful when calculating their costs and choosing the right properties to buy.
Researching properties before purchasing them will become more important after the introduction of these changes, particularly the surcharge. One thing that investors should always carefully consider is the infrastructure in the neighbourhood, as this will influence house prices and growth. Factors like modern, efficient transport links, parks, shops and leisure facilities can all add to prices and result in sustainable rental yields. Regeneration projects can also add a great deal of value.
An important thing to keep in mind is that it is always better to invest in a good property in a great area than a great one in a bad neighbourhood. The latter choice could result in issues with vacancies and attracting the right calibre of tenants. Always remember that properties can be improved, but you have little control over the wider neighbourhood.
Once you find a property that meets your criteria and offers potential for a sustainable yield, it is time to complete the purchase. The fact that you aren’t planning to live in the property means there is generally no chain to worry about so the sale can be completed quickly. This offers advantages for sellers because it means they can set the timescale.
The higher costs also mean investors need to take more care with protecting their interests. Landlord insurance is a must have because it provides a great deal of protection against lost rental income and repair costs in a number of cases. You could also choose one of our guaranteed rent schemes, which are available in Tower Hamlets and throughout the entire UK. Contact us today for advice on investments or to learn more about our unique guaranteed rent offer.
