{"id":13608,"date":"2018-03-20T12:15:06","date_gmt":"2018-03-20T12:15:06","guid":{"rendered":"https:\/\/www.buyassociation.co.uk\/?p=13608"},"modified":"2023-10-06T14:35:46","modified_gmt":"2023-10-06T13:35:46","slug":"traditional-landlords-ditching-vanilla-investments-in-favour-of-off-plan","status":"publish","type":"post","link":"https:\/\/www.buyassociationgroup.com\/en-gb\/2018\/03\/20\/traditional-landlords-ditching-vanilla-investments-in-favour-of-off-plan\/","title":{"rendered":"Traditional landlords ditching vanilla investments in favour of off-plan"},"content":{"rendered":"

As the buy-to-let sector continues to be targeted by the government, with tax changes, increased lending scrutiny and new licensing laws<\/a>, some landlords are reducing their portfolios or even leaving the sector – but swathes of savvy investors are switching to new opportunities in off-plan investments.<\/strong><\/p>\n

The number of buy-to-let mortgages taken out in the final quarter of last year fell to 12.5% of total lending, down from 14.4% the previous year, according to the Bank of England – a dip that could be linked to the new rules brought in by the Prudential Regulation Authority in September that introduced\u00a0stricter underwriting processes<\/a> for portfolio landlords.<\/p>\n

However, the private rented sector continues to grow<\/a>, as does the number of people searching for rental<\/a> accommodation. The fall in lending can be explained in a number of ways – there are new methods of investment in property, such as crowdfunding, while cash buyers continue to make up a large proportion of investors, particularly as more landlords cash in on their mature London investments and re-position themselves in the emerging markets of the north.<\/p>\n

Top challenges for landlords<\/h4>\n

Landlords have faced a number of challenges in recent months, and continue to do so. For example, from next month, landlords will only be able to offset 50% of their mortgage interest payments against their tax bill<\/a>, reducing to zero by 2020 (known as Section 24<\/a>); minimum EPC ratings<\/a> of E will be required on all rental properties, meaning some properties will need added investment; and more landlords will soon need to apply for licences, particularly for HMOs<\/a>.<\/p>\n

A better investment<\/h4>\n

However, it is not all doom and gloom for the sector, as the vast majority of buy-to-let landlords intend to stay in the market, and almost half (44%) still plan on growing their portfolios in the first half of this year, according to Mortgages for Business.<\/p>\n

To counteract the extra costs levied on landlords due to the government’s changes, it is nevertheless imperative that they find the best, most high-yielding investments for the future, which is why many are now turning towards off-plan developments<\/a> in up-and-coming and emerging markets.<\/p>\n

Looking outside London<\/h4>\n

Manchester, which has been named one of Europe’s fastest growing cities<\/a> by Deloitte, is one of the most important cities outside of London, having seen house prices jump by 6.7% over the past year, according to Hometrack – with further hikes of more than 20% to 30% expected over the next two to three years. With the north-west<\/a> in general expected to see property prices rise by around 18% by 2022, compared to London’s 7.1% growth forecast, Preston<\/a> is another exciting emerging market that is expected to see a snowball effect in the coming years.<\/p>\n

Meanwhile, the West Midlands, and Birmingham in particular with the upcoming Commonwealth Games 2022<\/a>, is about to see huge investment from both public and private sources, and investors and landlords are already snapping up opportunities in the region.<\/p>\n

Off-plan opportunities<\/h4>\n

Buying off-plan property in these areas is enabling landlords and investors to secure high-quality, well-located properties before they are built at the most competitive prices, as opposed to buying second-hand or after completion – meaning maximum potential profits. Many such properties are designed to be rented out –\u00a0build-to-rent<\/a>, a sector which has grown fivefold since 2013 according to BPF and Savills – and some come with assured net yields for the investor. And in terms of one of the upcoming pitfalls of owning a rental property, the minimum EPC rating, investing in a new-build development means owning an energy-efficient property, which will also be a huge draw for potential tenants looking for a modern home<\/a>.<\/p>\n

To see some of the opportunities currently available for investors and landlords, as well as owner-occupiers, see our investments page<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

As the buy-to-let sector continues to be targeted by the government, with tax changes, increased lending scrutiny and new licensing laws, some landlords are reducing their portfolios or even leaving the sector – but swathes of savvy investors are switching to new opportunities in off-plan investments. The number of buy-to-let mortgages taken out in the… Read more »<\/a><\/p>\n","protected":false},"author":1069,"featured_media":13643,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[2,4,6],"tags":[22,341,269],"acf":[],"_links":{"self":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/posts\/13608"}],"collection":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/users\/1069"}],"replies":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/comments?post=13608"}],"version-history":[{"count":1,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/posts\/13608\/revisions"}],"predecessor-version":[{"id":6097171,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/posts\/13608\/revisions\/6097171"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/media\/13643"}],"wp:attachment":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/media?parent=13608"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/categories?post=13608"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/tags?post=13608"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}