Is Property Still Profitable? Time, Cost, Benefit

 

The Private Rented Sector in Wales is going through a significant period of change. New laws, changing demographics, the emergence of “generation rent” and planned changes to the way landlords are taxed, have left many scratching their heads and asking a simple question. Is being a landlord still profitable? The simple answer, as with most things in this world, is yes, – with the right experience, guidance and strategy.

Rents in the UK are at their highest ever level and look set to continue rising. Wages are increasing, the stigma that once surrounded renting has disappeared, and the huge shortage of housing that underpins private rental prices looks set to remain. Furthermore, we live in an age of mobility. Many people WANT to be mobile, to see more of the country, be able to change jobs quickly etc. – renting is, therefore, a convenient lifestyle choice, without the hassle of house purchase. All of these factors (as well as many others) have meant that rents have not just increased, but increased at a faster rate than the Consumer Price Index, creating a Real Term gain for landlords (over 10% between 2001 and 2011). Rent price inflation outstripping that of the CPI, indicates rent is not treated as a “cost of living” by many, which should stand landlords in good stead for the future, especially as the number of households in the private rented sector is expected to grow between now and 2019 to 6.04 million (an increase of 1.25m)

So What’s Happened?

  1.      Tax changes introduced by George Osborne will ultimately mean by 2020, tax relief on mortgage interest will be capped at 20%, even for 40% tax payers. 40% tax payers with high LTV mortgages may well notice an impact on their bottom line and I would suggest they seek professional advice from a tax advisor about these changes.
  2.      SDLT - Buy-to-let landlords and people buying second homes will soon have to pay more in stamp duty. From April 2016, those purchasing an additional residential property in England and Wales will have to pay a 3% surcharge on each stamp duty band
  3.      Rent Smart Wales – Mandatory registration of landlords. As well as an initial fee, if you, as the landlord, undertake any of the predefined “letting activities” such as viewings and rent collection, you will need to attend a training course and pay an additional fee to secure a license and be deemed a “fit and proper” person to manage the property
  4.      Immigration Act 2014 – This piece of legislation will place a duty on all landlords to ensure their tenants have the right to live in the UK

Likely future changes:

  •         Smoke alarm and CO legislation is likely to come in at some point as this has already been rolled out in England.
  •         Renting Homes Bill
  •         New HMO (House in Multiple Occupation) licensing Schemes

Having seen the above, landlords can be forgiven for feeling somewhat under attack. Legislation, tax changes and new ‘border guard’ duties have proved to be the last straw for some landlords as they predict the end of the Private Rented sector!

The truth however is, with the right guidance, being a landlord is as profitable as ever. While we leave tax and financial guidance to the tax professionals, we can advise on where to buy, what to buy and when to buy it. Moreover, we can find you the perfect tenant at an incredibly competitive price and ensure the tenancy runs smoothly with the best management service around.

Our Values are simple: 100% Honest, 100% Transparent, Fiercely Competitive

We have 100% landlord retention to date and so are in a very strong position to say we can help you make your investment a success. In addition to offering the very best customer service, any profits we make are invested into Taff Housing Association in order to facilitate their continued work and support within the local community (http://www.taffhousing.co.uk/community-news/) . So as a landlord, not only will you be doing the best thing for your property investment, you will be doing your bit for the community, all while enjoying the best service in town!

If you fancy a break from the norm and want to feel relaxed about renting your property, safe in the knowledge things are being taken care of, please get in touch on 0300 5000 601 or email hello@adorecardiff.co.uk,