What now for Buy to Let investors?
Things are looking bleak for buy to let investors but there are other markets that can help fill the gap.
Since the changes brought in by the government last year which included abolishing tax relief on mortgage interest and the additional stamp duty charges things have looked a little bleak for many investors. However all is not lost, over the last six months of 2016 CMD have seen a significant rise in the Out of Area Investor (OAI).
These are individuals who have made a strategic decision to no longer invest in the south of England were they live but to invest in key areas on the north, such as Liverpool, Newcastle and Leeds. James Hanrahan of CMD placement team has been working with a number of individuals who have made the move. “I have seen landlords get incredible returns on their investment in the north. For example, we had a client who bought a 3 bedroomed house in Liverpool near a hospital. The purchase price was £60,000 and he achieved a monthly rental income of £600. His initial outlay was only £15000 deposit and stamp duty of £1800 plus lenders costs. The purchase was via a limited company. This client has moved on to purchase eight additional properties in the same location.”
CMD have been able to secure this type of investment for a number of OAI’s since the recent changes and have lenders willing to work with this type of investor provided they have experience in the sector plus a good local letting agent.
There will be those that say that the equity growth will not be there for the OAI investor. However, who’s to say that with the movement of the OAI to the north an increase in value won’t follow after all there are those who blame/thank the buy to let investor for the increase in property value in the south.