Real Estate

In many ways buy-to-let owners of investment properties face more challenging business conditions than ever before. Scaling back of tax breaks such being able to deduct mortgage interest on investment properties and increases to stamp duty on second homes have contributed to finer margins when it comes to being able to realise a profit. It’s also unlikely that investment properties will see the same level of capital gains as has been the case over the past several decades and investment properties will rely more on rental income for their ROI.

With the new tax regulations putting the squeeze on landlords many have rebalanced portfolios of investment properties towards more profitable multiple occupancy (HMO) formats. Nominally, the classification criteria of whether or not an investment property with tenants is an HMO is that it houses five or more independent renters who are not from one family but share some facilities such as a bathroom or kitchen. However, beyond that, the property also needed to be on at least three floors before landlords were required to have an HMO license for the property.

Changes to the tax breaks until now enjoyed by buy-to-let landlords who own investment properties may have some questioning how attractive the asset class will continue to be. However, the professionals certainly appear to have unshaken faith in the future of UK buy-to-let. Canadian pension fund unit Oxford Properties has announced taking a £600 million stake in Get Living, a built-to-let specialist residential property fund.

Recent property market data indicates that tax changes and property price growth in London and the south of England putting pressure on rental yields has started to change the face of the UK’s buy-to-let market. Land Registry data analysed by research company Residential Analysts show a clear drop in transactions involving the kind of residential units favoured as investment properties over last year. Over the course of 2017, 10% less flats were purchased in England and Wales in comparison to the previous year. That’s against a wider fall over all property transactions of just 2.1% over the same period.

It’s been well publicised that Buy-to-Let landlords have been hit in the pocket by recent updates to the tax regime around the investment class. However, according to a recent survey by property consultants Knight Knox, the Yorkshire and Humber region is still thriving. In defiance of the 3% stamp duty hit added to the cost of buying buy-to-let or second properties and landlords no longer being able to deduct mortgage interest from taxable rental income, average gross rental yields in the region rose last year.

Mortgage data suggests that recent changes to the tax regime around investment properties is leading to waning enthusiasm among buy-to-let landlords. However, with the UK property market’s performance becoming increasingly fragmented on a regional level over the last year or two, certain areas are still a hotbed for buy-to-let.

After nearly a decade over which prices have been strongly on the up, the UK’s property market has notably slowed over the past 12 months or so. Halifax reported this week that April saw a 3.1% drop in average prices on a country-wide basis. Over the last quarter, a more accurate gauge than any single month, prices edged down by 0.1% when compared to the previous 3 months. April’s slide was the most significant since 2010 and naturally prompted concerns it may mark the onset of a more sustained malaise for house prices.

Do you own more than one investment property? If so, re-mortgaging them is probably about to become a lot harder. New directives issued to the UK’s banks and building societies last year by Bank of England branch, the Prudential Regulation Authority, specifically targeted ‘portfolio landlords’ who own four or more investment properties and operate outside of a limited company structure. They mean tightened requirements that require the whole portfolio to be assessed rather than just the property a re-mortgage is being applied for. Until now approval criteria were based solely on the financials of the property being re-mortgaged.

Blockchain technology is best known as the technology that cryptocurrencies such as Bitcoin run on. However, for those not interested in investing online in cryptocurrencies, recent developments mean that in the near future your next investment properties might also be purchased over a blockchain platform. Many experts believe that one of blockchain technology’s most natural and effective applications will be in changing the way property deals are done.

Milan is becoming a bit of a hotspot for international investors looking for properties. While the capital of Lombardy doesn’t have the same tourism pull as other Italian renaissance cities like Rome and Florence, it actually boasts more visitors. MasterCard’s Global Destination Cities Index puts the number of visitors to the city over 2017 at 8.17 million compared to Rome’s 7.09 million. The reason behind the high visitor numbers can be linked to why property investments in the city have become so popular – business is booming. More than 25% of the visitors to Milan come on business, compared to only 14% of the total to Rome.