Will UK buy-to-let remains profitable in 2019?

7 February 2019 Written by Newsroom

The UK buy-to-let sector have traditionally offered a lot of potential for property investors. During the years, the combination of many factors, including strong demand for housing in the private rental market and consistent price increases in major towns, cities and regions, created a positive picture for buyers looking for both rental returns and long-term growth.

Many investors are now looking ahead to what 2019 could bring.

The past few years have produced many changes for the buy-to-let property market in the UK, with 2018 proving particularly eventful.

One of the most noteworthy recent changes has been the gradual reduction in levels of mortgage interest tax relief which landlords are able to claim. In the 2018-19 financial year, the amount of relief dropped to 50%, and in 2019-20 this will fall again to 25 %. The policy will be eliminated entirely from 2020 onwards.

Stamp Duty tax changes introduced in 2017, where buy-to-let properties and second homes are liable for an additional 3% levy, has seen the upfront cost of a property investment increase.

Buy-to-let property owners have also had to dealing with the broadening of the criteria for houses in multiple occupation (HMO), meaning more properties will now need an HMO licence from local councils.

There have also been broader political and economic challenges, most notably Brexit. As the government continues to negotiate a deal for Britain to withdraw from the European Union, the 29 of March deadline is approaching fast, and still remains a lot of uncertainty for all kinds of businesses, workers and investors.

However, amid all the recent changes and unpredictability of recent years, investors have kept their trust in the UK property market. Recent figures have clearly suggested that many investors continue to consider UK properties as one of the safest investments around, regardless of external trends and challenges, with the average market value of landlords’ investment property portfolios having reached a record high of £1.7 million in Q3 2018.

Tenant demand remains robust, with well over 80% of landlords reporting demand as stable, or even growing, with property voids at 2.9 weeks per year on average.

Therefore, notwithstanding the many questions yet to be answered about Brexit and the impact it could have on the British economy in 2019, buy-to-let property looks to remain one of the most reliable, popular and profitable investment options, offering strong potential for investors, being the demand for rental housing stronger than ever.

This is particularly true outside London, with high costs in the capital reducing yield potential for buyers. The north-west, home to some of the UK’s most popular university cities, such as Manchester and Liverpool, is undoubtedly an investment hotspot, thanks to lower prices and higher average rental yields.

One of the most undeniable qualities of Britain’s property market has always been its strong resilience. In our opinion, still investors can be confident in the UK property market which will continue to deliver promising results in 2019 and beyond.

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