With the start of the New Year investors both active and otherwise will be interested the property market for 2016 and onwards. There are many factors, such as the Landlords 3pc Stamp Duty Hike for second homes coming into play in April 2016. Low oil prices and a strong pound will continue to have an effect.
With that said many are ploughing ahead with buy-to-let investments and fuelling the housing prices by ramping up acquisitions prior to the Landlords 3pc Stamp Duty Hike. There are those investors who are being dissuaded by the future inability to claim interest payments against taxable income which will come into force in 2017.
Investors were have been able to claim tax relief on their mortgage interest payments at their marginal rate of tax. Meaning a basic rate taxpayer would get 20 per cent tax relief, but those at a higher rate would receive 40 per cent relief, while top-rate taxpayers could claim 45 per cent.
When the changes come in, tax relief will be a flat rate of 20 per cent. Landlords who pay basic rate tax would see no change, but those on higher incomes will find themselves losing much more in mortgage interest payments. This will no doubt deter the more risk averse investors.
If planned interest rate rises from Bank of England come into effect this year there could be a potential returns reduction for buy to let investors.
More and more mortgage products are being used for “help to buy” getting an increased number of first time buyers onto the property ladder and ultimately this is the area of the property market investors compete in…
Permitted Development has contributed to the building of thousands of houses in recent years and will continue to do so in 2016.
In areas like London the influence of foreign investment will continue to push house prices up. London has the highest rents of any city on the planet at an average of £2k per month, and rose by more than 4 percent last year so it’s becoming an investors market.
But huge variation in rents across the capital means that there is still hope for many.
Areas like Bexley have been named as the most affordable London borough in which to rent, with the average house now costing around £1k per calendar month. For investors coming into the market they can still access affordable investments with strong demand.
UK house prices grew at their fastest pace in eight months in December 2015 and this was amid warnings that a shortfall of new supply could push price growth higher in the new year.
Prices rose by an average of 0.8pc in December 2015, according to data compiled by Nationwide, an acceleration from November’s 0.1pc growth. The monthly rise took the annual pace of growth to 4.5pc and the price of the average home to £197k.
We personally see the property market factors mentioned having varying affects depending where you are in the country, clearly London will always be on the rise, but other parts of the country isn’t so obvious.
What are your thoughts on the 2016 property market? Comment below.