The buy-to-let market has suffered in recent times due to changes in tax legislation and Stamp Duty Land Tax (SDLT) levy increases which have impacted smaller investors, some of whom have left the market as a result.
However, larger property investment companies continue to remain active in this market and we expect that, into 2020, whilst we may see some fluctuations in investment sentiment as a result of Brexit, the market is likely to play out much as it did in 2019, with yields in London predominantly remaining static.
With any buy-to-let investment, location is a fundamental consideration for investors and sentiment is notorious for areas outside of London and regional cities such as Birmingham and Sheffield, where capital values are lower.
Recently, we have witnessed rental yields within London stabilise and, now that the general election is settled, confidence has increased to a certain degree.
Not only this, foreign investment is still strong for those with deep pockets, and a weakened pound continues to help those investing from abroad.
However, some foreign investors have suffered as a result of ‘blind buying’, something which we are witnessing at an increasing level in our property valuation work across the City.
We’ve seen a number of instances where overseas buyers have suffered from lower than anticipated rental yields as a result of buying blind, where properties purchased off-plan some years ago when the market was stronger, fail to achieve the same value, and therefore the same rental yield potential today.
This is down to those buyers being poorly advised, or not advised at all, at the point of investing.
With this in mind, care needs to be taken to ensure that, as an investor, you do your property due diligence homework before investing in property.
As we look ahead to 2020, we expect that there will be some property fluctuations which will affect the buy-to-let market, and it will be interesting to see what comes out of the Budget on 11 March and how potential changes might impact the property sector.
Ultimately, however, buy-to-let remains a strong investment option over the medium to long term, representing a secure form of investment for both passive and capital growth.
If you are looking to invest in or dispose of a property or portfolio, our property investment advisers and property valuation experts can provide the insight and expertise necessary to ensure the best possible return on investment. Get in touch for more information.