‘Taxing’ Time for the 989 St Neots Buy To Let Landlords

Over the last twenty years, there has been a shift in the way the St Neots (and the UK’s) property market works. From 1960-1990, a large majority of people aged around 20 saved up their 5% deposit, went without life’s luxuries of going out and holidays etc., for a couple of years and then bought their first home with their hard earned savings.

By 2000, 57.1% of St Neots public aged 25-29 years old owned their own home, compared to 46% nationally (and 79.8% of St Neots’ 30-34 year olds in 2000 owned their own home – again compared to 64.2% nationally), whilst the remaining youngsters mostly rented from the Council and in some rare cases, privately rented.

Now it’s 2018, and those levels of homeownership have slipped dramatically and now only 30.4% of St Neots public, aged 25-29 years old, own their own home and 53.7% of St Neots public, aged 30-34 years old, own their own home.

There has been concern in Government since the late 2000’s, that this shift from homeownership to private renting was not good for the well-being of the Country and things needed to change, to make it a more level playing field for first time buyers. In a nutshell, house prices needed to be more realistic and there needed to be a carrot and stick for both landlords and first time buyers.

In the 1980’s and 1990’s, interest rates were the weapon of choice for the Government to cool or heat up the UK housing market, and it did work… up to a point, anyway. Furthermore, interest rates also affected so many other sectors of the UK economy, and not always in a good way - The policy of interest rates to control the economy, also known as the ‘Monetary Policy’, is primarily concerned with the management of interest rates, and the supply of money, and is carried out by the Bank of England.

It’s just in this post Credit Crunch, Brexit environment, the use of higher interest rates wouldn’t directly affect landlords because around two thirds of buy-to-let properties are bought without a mortgage! Therefore, an increase in interest rates would have hardly any effect on landlords and hit the first time buyers - the people the Government would be trying to help!

Also, given muted growth of real income in the past few years, an increase in interest rates would have a massive effect on Brit’s household disposable income. Yet, over 90% of new mortgages in 2018 being taken are fixed rate and with such low rates, it has made buying a property comparatively attractive.

Instead, over the last 8 years, the Government has encouraged first time buyers and clipped the wings of landlords with another type of economic policy known as Fiscal Policy - the collective term for the taxing and spending actions off of the Government. First time buyers have had the Help to Buy Scheme, Stamp Duty Exemption and contributions to their deposit by HMRC. On the other hand, landlords are able to offset the tax relief of their mortgage payments against income change (for the worse), an increase in Stamp Duty (for the worse) and they will be hit with additional costs as the Government will be phasing out fees to tenants in the next 12 to 18 months.

So, what does this all mean for the 989 St Neots landlords?

The days of making money in St Neots buy to let with your eyes closed are long gone - There are going to be testing times for St Neots landlords, yet there is still a defined opportunity for those St Neots landlords who are willing to do their homework and take guidance from specialists and experts.

It’s all about looking at your St Neots portfolio, whether that is by yourself or by a professional, and deciding if your current portfolio, mortgage and gearing are designed to meet your targets and aims from the investment... in terms of income now and in the future, capital growth and when you plan to dispose of your assets.

The opportunities will appear in the St Neots property market for St Neots landlords, from gentler growth in property values linked with a restrained St Neots property market. Meaning, if you put in the time, there will be deals and great bargains to have. The bottom line is, private renting will continue to outgrow first time buyers in the next 5 to 10 years and as we aren’t building enough homes in the UK, which means rents can only go in one direction – upwards!

Thank you for reading.