What Options Do UK Buy to Let Investors Have?
The UK government has, for reasons unknown, been using UK buy to let investors as whipping boys for years now, but of late has really stepped up the assault.
Landlords are seen, at least by the media, as bad, exploitative people for simply providing a service that people want, need, and are willing to pay for. We’ve taken it lying down to date, because its usually tax on what was in the past a very profitable business.
However, the latest changes in the law are likely to be the straw that broke the camels back. Starting from next April, landlords will no longer be able to deduct mortgage interest from their rental income before tax. (http://www.theweek.co.uk/66688/multi-property-buy-to-let-owners-face-squeeze ) This means that landlords that were previously just about breaking even, will no longer be doing so, and many are likely to simply sell up while they can. (Heres an example – http://www.spectator.co.uk/2016/02/buy-to-let-investing-just-became-a-very-very-bad-idea/ )
In London, it looks like more needless government intervention is likely to make life worse for both landlords and tenants. Letting agents will no longer be able to charge letting fees. (http://www.bbc.com/news/business-38065249 ) Anyone with an ounce of common market sense (except for the government evidently) will know that the fee will simply flow into higher rents, but this takes time and is likely to mean more landlords selling up, less supply, a less attractive proposition to new landlords, and higher rents for tenants.
So what are the options for non-corporate UK buy to let landlords? (large corporate landlords are largely exempt here)
- One option could be to hold on and take the battering, hoping that increasing scarcity could in turn increase rents to compensate for the tax increases and other limitations/regulations. And hope that more don’t come. Realistically this is more of a ‘head in the sand’ option – the government isn’t likely to stop this assault (which is bizzare seeing as the bulk of small landlords would normally be conservative voters) and the ways to make money in the business are getting harder and harder.
- Another option could be to sell up and buy in a location where the boot is on the other foot, so to speak. One good example could be in USA, where a real estate investor has just become president. With the right guidance, the whole process is simple and profitable, even cash on cash.
- Donald Trump being president is great news for real estate investors. He understands the business very well and has already indicated that he’ll make lending easier again, which is likely to bring up prices in ‘investment grade’ areas (which currently don’t have too much lending)
- Taxes are much lower (starting at 15%, but almost all expenses can be written off).
- The culture is very landlord friendly in USA, as are property rights vs squatters rights for example.
As our existing investor group will tell you, with Abbotsinch Capital (www.abbotsinchcapital.com) you’ll have a relationship with an established local and transatlantic team that can help you find the right tailored USA investment, with the kind of return you haven’t seen for decades in UK. We provide all the hand holding along the way (including Attorneys, LLC setup, bank accounts, insurance, and of course full service property management and after sales service) We look to grow with you, and provide a safe, secure environment in which to continue to build a portfolio and prosper for the long term.
For more information and/or to set up an informal chat about your investment requirements, please contact me on firstname.lastname@example.org