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Buy-to-let investing to “fall most dramatically” according to Savills


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6 Nov 2017

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The number of properties acquitted by buy-to-let investors using a mortgage will plummet by more than a quarter over the next five years, according to Savills.

The estate agent forecasts that the number of mortgaged buy-to-let investors will “fall most dramatically”. Savills broadcast the number will reduce by 27% from the existing 75,000 a year to just 55,000 by the end of 2022 as tighter mortgage regulations, increased stamp duty charges and the phasing out of mortgage interest relief will restrict buy-to-let investor activity.

 

Read more: BTL tax changes push ‘amateur landlords out of the market’

 

While phasing out of mortgage interest relief will deter many investors looking to take out a mortgage, Savills predicts that purchases by cash buyers will actually rise by 6%, with many investors looking increasingly to areas in northern England where yields are typically higher.

 “We have seen the earliest signs that some mortgaged buy to let investors may be selling stock,” said Lucian Cook, Savills head of residential research.

 “Those entering the market will be looking very carefully at yields and that will put the spotlight on urban markets outside the capital,” he added.

Savills also predicts that rents will rise in line with incomes, with rental growth likely to exceed house price growth in London.

 

The capital property market has had to accommodate a glut of stock after investors scrambled to buy before the 3% stamp duty surcharge on additional homes. Asking rents fell 3.2% in the year to June 2017 compared to a rise of 1.8% across England and Wales.Rents in the capital have now stabilised.

Compound growth is projected to be 17% between 2018-2022 in line with wage growth but ahead of inflation.

 

Read more: London is the most expensive region to be a landlord

 Withdrawal of mortgage interest tax relief will push investors from London to higher yielding regional locations. The increased rental supply is likely to dampen the potential rental growth beyond the capital.

Forecasts for mainstream rents:

 

2017

2018

2019

2020

2021

2022

5 year

2018-2022

UK

0.0%

2.5%

2.5%

3.0%

3.5%

3.5%

15.5%

London

-3.0%

3.0%

3.0%

3.5%

3.5%

3.0%

17.0%

UK excl London

2.0%

2.0%

2.0%

3.0%

3.5%

3.5%

15.0%

Wages

2.0%

3.0%

3.0%

3.0%

3.5%

3.5%

17.0%

CPI

3.0%

2.0%

1.5%

2.0%

2.0%

2.0%

9.5%

 

 

 

 

 

 

 

 

 

At Discount Insurance we value our Landlords and we do our best to find Landlord Insurance suitable to your needs. Give us a call for a quick quote on 0800 294 4522 today!


 
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