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Buy-to-let still growing despite tax hurdles

Tuesday 06 February 2018

The buy-to-let sector is still growing despite tax changes and other disincentives for investors, a new analysis of government figures by the Nationwide shows.
 
The number of privately rented households in England has reached a record high of 4.7m – an  increase of around 75 per cent over the past decade – according to the latest English Housing Survey from the Ministry of Housing, Communities & Local Government.
 
Around 20 per cent of households in England are now privately rented, up from 13 per cent in 2007.
 
Nationwide’s chief economist, Robert Gardner, said: “Within the 35 to 44 age group, the number of households renting has increased by 126 per cent over the past 10 years to 1.1m.
 
“There has also been a significant increase in the number of privately rented households in the 45 to 54 age group.
 
“It is interesting to note that the private rental market has continued to show steady growth despite a significant slowing in buy to let mortgage lending, suggesting a shift amongst landlords towards cash purchases.
 
“Changes to the tax system, limiting deductibility of mortgage interest, may be one of the factors behind this” he adds.
 
“Within the owner occupier sector, we’ve also seen a further uptick in the number owning outright, which stands at a record high of 7.9m.
 
“This is an increase of 1.4m over the past decade, nearly all of which has been amongst homeowners aged 65 or above.”
 
Meanwhile, an online agency claims that ‘serious portfolio landlords’ are remaining with buy-to-let despite recent tax and regulation changes making the sector more challenging for investors.
 
Having analysed its own registration data for the final quarter of 2017, Upad says it has seen a 20 per cent overall increase, year-on-year, in landlords registering. 
 
During the final quarter of 2017, registrations by landlords holding portfolios of five or more properties rose by 56 per cent compared to the same period in the year before.
 
And within the first four weeks of 2018, registrations have risen by 14 per cent compared to the same period a year ago.
 
James Davis, founder of Upad, said: “Legislative changes introduced by the government in the last couple of years will, no doubt, place doubt in the minds of some accidental and less committed landlords.
 
“It would be foolish, however, to think that those who have made the strategic decision to invest in property would be so easily put off.”
 

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