The majority of landlords remain confident about investment in the buy-to-let sector, despite tax hikes and tougher mortgage rules hitting the private rental sector, according to a new survey.
Two thirds (65%) of landlords are optimistic about the buy-to-let market, despite the phasing out of mortgage interest tax relief, with just 14% of existing buy-to-let investors concerned about the performance of their portfolios in 2018, according to Shawbrook Bank’s annual buy-to-let barometer, which explores the existing and future sentiment of professional landlords.
The study found that many investors are encouraged by strong tenant demand and high rental yields, with one in five (21%) experiencing an increase in demand from tenants in the year to 2018.
Although landlords are optimistic, they are also realistic, the survey shows, understanding that they will be facing challenges both in the near and long-term, particularly relating to tax changes.
The number of landlords actively investing in the buy-to-let sector has dropped in recent months, and many experts fear that other existing landlords are making plans to exit the market, as they seek to avoid the Government’s so-called attack on the buy-to-let sector.
But, despite the tax changes being imposed on buy-to-let landlords, the indications are that bricks and mortar will remain a safe long-term investment, which is why 39% of landlords surveyed are planning to add to their existing property portfolio within the next 12 months, with the North West and South East singled out as the preferred regions.
Karen Bennett, the Managing Director of Shawbrook Bank Commercial Mortgages, says: “There’s a healthy dose of uncertainty around at the moment, but the buy-to-let market is showing its resilience. Property continues to offer an excellent underlying investment vehicle for professional landlords with the right investment strategy.
“While the investment case for buy-to-let remains strong, there are particular challenges ahead for portfolio landlords and the additional impact of the Prudential Regulation Authority changes.”
She adds: “Landlords now face much more stringent affordability tests, and it’s therefore more important than ever that landlords are clued up on their obligations as the market continues to get even more complex.”
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