Land­lords: Make sure the num­bers stack up

Kentish Gazette Canterbury & District - East Kent Property - - HOMESNEWS -

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 at­wayprop­erty.

A rise in stamp duty for buy-to-let land­lords seems likely to slow de­mand in the Med­way hous­ing mar­ket

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