Landlords: Make sure the numbers stack up
Can you remember 10.05pm on Thursday, May 7, last year when BBC exit polls suggested the Conservatives would be returned with a majority in the general election?
The middle classes in Kent exhaled a huge sigh of relief, as the county’s landlords, faced with rent controls from Red Ed and the Labour Party, now had something to cheer about.
The Tories were always considered to be a political party that accepted the importance of the rental market, supportive of its development whilst properly targeting the lawbreaker-landlords renting out below-standard accommodation.
Since May 2015 though, George Osborne has announced future rises in stamp duty for buy-to-let landlords and a change in the interest relief on buy-to-let mortgages. Now, some people have started to question their blue loyalty.
However, things could have been a lot worse for our landlords.
Previous ideas of making landlords pay more tax was the theory behind increasing capital gains tax rates to the landlord’s own income tax levels.
If landlords would have had to pay capital gains tax of 40% to 45% on any uplift in value, I can tell you here and now, that would have made investing in property a non-starter for almost everyone.
However, I will admit the loss of mortgage higher rate tax relief will make a number of properties not stack up financially.
The new rules are likely to slow demand in my local housing market in Rochester, which is, in fact, good news for the other landlords, as there is less competition from ‘amateur’ landlords.
Just a thought, but making Rochester landlords think twice and run their numbers more cautiously is not such a bad thing.
So looking at the numbers, the November figures have just been released and they show a growth of property values in Rochester of 0.2% over the month of November.
That figure doesn’t surprise me due to the time of year.
It’s quite dangerous to look at one month in isolation, so looking at a more medium term view, over the last 12 months, property values in Rochester have risen by 8.4%, not bad when you consider inflation is running at -0.1%.
All I can say to the landlords of Rochester is do your homework, make sure the numbers do stack up, take advice and opinion from professionals and, above all, for those of you planning to add to your portfolio, buy the right property at the right price.
Spencer Fortag and the team at Dockside property Services are on 01634 400922.
Spencer’s Medway property blog is at www.medwayproperty. blogspot.co.uk
A rise in stamp duty for buy-to-let landlords seems likely to slow demand in the Medway housing market