The time is now for first time buyers
Throughout the last few years, a lot of changes have affected the investment market and although the smart investors still see their money is better invested in property than elsewhere it has concerned others and we have seen less buyers come to the market because of this.
Early 2016 saw a rush of investment purchases with investors adding property to their portfolio before the increase to 3% on stamp duty for a secondary purchase came into force on 1st April 2016.
A further change in tax relief for rental income since April 2017, is further evidence of the government forcing an investor to assess their investment and seek other options. By April 2020, landlords will no longer be able to deduct their mortgage costs from their rental income. Therefore all rental income will become taxable.
Some investors have sought the option of purchasing further property through a company to help avoid the above tax relief changes, others have just avoided further purchases altogether and some have considered now is the time to sell. Throw in the further uncertainty around the imposing tenant fee ban in Spring 2019, all signs point towards less activity from investors strengthening the position of first time buyers and giving them more choice in the market. This in turn suggests a slower housing market is upon us for the first time in many years.
The expectation of the tenant fee ban could see further costs front loaded on to landlords upfront charges and although this is likely to see an increase in rent, it’s still a further concern for investors as agents are going to need to make up the lack of income from tenants. I would expect this to mean tenants pay more over an extended rental period but less upfront financial outlay and landlords pick up the upfront costs recharged by the agent.
Changes in Stamp Duty introduced in November 2017 meant no Stamp Duty charge for first time buyers up to £300,000, a saving of up to £5,000 and a further saving they will gain on the investor, who in turn is now charged a minimum 3% Stamp Duty or an equivalent of £14,000 on a £300,000 purchase.
In my opinion, the market for the first time in many years suits the first time buyer and although clearly your money is better in property than sat in a bank account, certain investors are assessing their next move. It will be interesting to see what the next 18 months lies ahead.
For more information or advice on your first time purchase, investment portfolio or mortgage advice contact Neil@nexaproperties.com or contact us on 023 9229 5046.