I don’t know about you, but if you watch Sky News every
waking hour or read the newspapers, it always seems we as a Country, Europe or
the World seem to lurch from one crisis to another. Another week, another crisis
averted. It was only last summer the soothsayers were predicting the end of the
world over the supposed house price bubble that many believed was developing in
the South. Property prices were rising at 20%+ per annum in London, only for
things to ease as the property market in the Capital showed a controlled
slowdown and cooling in activity with price growth easing to a more realistic
8% to 9% per annum. Interestingly, there was no panic when some modest price
drops were seen in some of London’s highest priced suburbs.
However, this month’s crisis is the buy to let boom and as
George Osborne always likes to be topical, in the July emergency budget, he declared
that he will start to scale back, from 2017, the tax relief that those high
income tax rate landlords with a mortgage have benefited from. The Daily Mail ran
headlines stating it was the end of the private landlord; predicting many
landlords will give up on buy to let altogether and we will be inundated with rental
properties up for sale as landlords feel squeezed from the market.
Even Mr Carney, the Governor of the Bank of England,
recently cautioned that the buy to let property market could destabilise the
whole UK property market. He was concerned landlords who bought with high loan
to value mortgages could be spooked if there is a property crash, they would panic
because of negative equity, sell cheaply, which would worsen house price falls.
End of the world then?
.. this week, yes probably, but next week .. that’s another story! Before we all go and live like a hermit in
the Scottish highlands, let me explain to you my perspective on the whole
subject. As I mentioned a few weeks ago, two thirds of buy to let properties
bought in the last eight years have been bought mortgage free – so they won’t
be affected by the Chancellors’ tax changes. Also, something I feel is often overlooked but
very important, is the fact that landlords historically have only been able to
normally borrow up to 75% of the value of the rental property. In the last property crash of 2008, property
values dropped by the not so insignificant figure of 17.37% in Huddersfield,
but even then, when we had the credit crunch and the world’s banking sector was
on the brink, no landlord would have been in negative equity in Huddersfield.
I believe we have a case of ‘bad news selling newspapers’
and I believe that buy to let, and the property market as a whole, will carry
on relatively intact. It’s true reducing tax relief will hit landlords who pay
the higher rate of income tax and this may slightly diminish buy to let as an
investment vehicle, but I doubt people will sell. Many landlords have been lazy
with their investments, buying with their heart, not their head. You would
never dream of investing in the stock market without doing your homework and
talking to people in the know. If you want to make money in the Huddersfield
property market as a buy to let landlord, it’s all about having the right
property and as you grow, the right portfolio mix to offer a balanced
investment that will give you both yield and capital growth.
The Huddersfield buy to let market still offers good
investment opportunities to new and old alike. Those who have bought in the
last twelve to eighteen months have reaped the benefit from buying in Huddersfield,
because the town offered a combination of reasonable house prices with
subsequently increasing rents. Property
values have risen by 4.24% in the last eighteen months in Huddersfield, whilst
looking at rents, in Q2 2015, average rental values for new tenancies were 4.8%
higher than Q2 2014, which is particularly interesting as they only rose by 0.8%
between Q2 2013 and Q2 2014.
I cannot stress enough the importance of doing your
homework. One source of information and advice is the Huddersfield Property
Blog where I have similar articles to this about the Huddersfield property
market and what I consider to be the best buy to let deals around at anyone
time in the City, irrespective of which agent it is on the market with. If you
haven’t visited and you are interested in the local property market in Huddersfield
.. you are missing out! http://huddersfieldproperty.blogspot.co.uk/
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