Record-low buy-to-let mortgage rates are encouraging more people to purchase properties with the intention to rent them out.
Interestingly, nearly three in four people don’t think interest rates will rise this year, according to Romans’ latest property poll.
Controversially, many reports suggest the Bank of England will increase its base rate in the second half of 2015, waiting until after the general election in May.
“Unfortunately no one knows when rates will rise, or by how much” comments Vincent Courtney, managing director of sales at Romans. “Some experts predicted a small rise at the latter part of 2014, which didn’t happen, and some are now suggesting we won’t see any movement until 2016.
“What we do know is that interest rates can have a big impact on your mortgage repayments, and with rates remaining at record lows of 0.5 per cent since March 2009, is it really worth the risk of waiting to see what happens to interest rates, if you’re thinking of investing in property?”
2. If you’re over 55 your pension could finance property investment
The new pension rules have enabled those aged 55 and above to withdraw their entire pension fund in one go and only have to pay a marginal rate of income tax.
These new rules are welcomed by many landlords, especially as the average deposit for a buy-to-let mortgage stands at a huge Â£100,000, according to the Mortgage Advice Bureau, an increase of 15 per cent from last year.
3. You could save a lot of money when purchasing investment property thanks to the Stamp Duty reforms
The 2014 Stamp Duty reforms have introduced a progressive structure, similar to income tax, which chancellor George Osborne said benefits 98 per cent of property purchasers â?? a tax cut worth Â£800million a year.
Lower-priced properties benefit the most from the new Stamp Duty Land Tax; ideal for investors who tend to go for smaller one, two or three-bedroom apartments or houses. The Daily Telegraph has reported these new rules will save landlords around Â£50million per year, based on investors buying properties at the current rate.
4. Existing landlords are growing their portfolios; don’t miss out on the opportunity to grow your own
Forty-three per cent of landlords own two or more properties, according to the Property Academy’s latest Landlords and Tenants Survey.
“This statistic highlights the growth of the buy-to-let market,” comments Ricky Bhurji at Romans. “It suggests that many landlords have consciously opted to grow their portfolio and buy more properties because of the strength of this type of investment.”
5. Rents are rising
Rents across the UK rose by 7.6 per cent in the three months to December 2014, compared with the same period in 2013, according to the HomeLet Rental Index.
With local experts predicting price increases of five to 10 per cent during 2015, more people are expected to look at buy-to-let opportunities. In fact, in a recent survey of landlords, 32 per cent said they are ‘highly likely’ or ‘possibly’ likely to add to their portfolio in the next 12 months.
6. Strong capital growth
There are very compelling statistics for capital growth over the next four years, with average house prices in the South East expected to rise by 37.3 per cent by 2019, according to Rightmove and Oxford Economics.
Rightmove currently states that the average house price in the South East is Â£327,850, which could rise to approximately Â£450,138 by the end of 2019, based on these predictions.
Capital growth, alongside rental income, is the strongest return on investment a landlord will benefit from, therefore it’s vital that you seek the expert advice to ensure you purchase the right property in the right place.