The Truth About Buy to Let
Updated: Jan 23, 2019
There has been much scaremongering in the UK media about changes to the way buy to let properties are being taxed and, while it's true that changes are taking place, the real picture is nowhere near as bad as the Daily Mail might lead you to expect.
For a start, you can still claim tax relief on mortgage interest, just not at the higher rate of tax. This obviously isn't ideal, but there are simple ways to avoid it, such as putting your buy to let portfolio into a business.
There have also been many stories about Stamp Duty and the new rate for second homes that was introduced a couple of years ago. Again, this may be a pain, but it's a one-off payment and really shouldn't put off the serious property investor.
The truth is that the changes made to buy to let rules and regulations by the UK government could ultimately be advantageous to landlords who do their homework and build the right portfolio. As some investors jump ship, demand will increase and their could even be the chance to pick up existing rental properties at great prices, especially rental-specific dwellings such as HMOs.
As with most changes introduced by this government to rein in the buy to let sector, despite the fact that they've done virtually nothing to build more social housing or look at alternatives, it is the tenant that will ultimately end up paying the price in the form of higher rents.
It's also worth bearing in mind that mortgage rates on buy to let loans are currently at their lowest ever levels, which means that the savings in a five year fixed rate deal could well cancel out any additional costs imposed by the government measures.
We will cover all of these points in more detail in future Clarice Carr & Company blogs, including why we feel that the North East region is the perfect locations to build your buy to let investment portfolio.
For now, bear in mind that building a successful buy to let portfolio takes time and effort. You need to find the right properties in the right places and spend the right amount to achieve a return. That's why I believe that the invest and refurbish model we recommend to our clients is the best way to build your portfolio and add value to the property.