When the chancellor announced there would be an enhanced level of Stamp Duty on all buy-to-let and second homes from April 2016 it sent shockwaves through the buy-to-let community. Every cloud has a silver lining so for those who take a long-term view of buy-to-let investment here are some positive things to think for 2016:

1. Stamp Duty off-set against Capital Gains Tax

The Treasury has confirmed that Stamp Duty can be off-set against your future Capital Gains Tax liability when you sell your property. Therefore, you should just look as the increased Stamp Duty charge as an advanced payment on CGT!

2. Decrease in Competition

The raft of new legislation that entered the sector last year has conspired to spoil the party. The smarter (glass is half full) landlords will up their game in terms of education and research so they can find the best investment opportunities, maximise the return on their investment and navigate through the growing minefield of legislation. The not so savvy (glass is half empty) landlords will bow to the media negativity and head for the exits. This will reduce the supply of properties in the private rented sector and as a result those landlords who stay will enjoy increased rents and a wider choice of tenants.

3. Investment = Opportunity

The Chancellor gave a veritable list of new property investment hotspots which could blossom following major investment such as the building of nuclear power plants for which workers will need houses. Here in Somerset, Hinckley is an obvious example of this. Also the fact that the South West of England enjoys the highest employment rates bodes well for the local economy.

4. Development Opportunities

There will be increased opportunity for landlords who get involved in the development side, taking advantage of Permitted Development Rights.

5. Capital Growth and Increasing Yields

Those landlords who adjust and adapt, and who take a long term view, could also benefit from significant capital growth as property prices are forecast to continue rising over the next decade and interest rates are forecast to remain low for a while yet, meaning yields will increase.

Additionally, net migration figures released by the Office of National Statistics (ONS) recently suggest that demand for rental property is only going to increase.

Estimated net migration to the UK reached a record 336,000 in the year to June, ONS figures revealed.

The figure – the difference between the number of people arriving and leaving – was 82,000 more than the previous year.

Although Mr. Osborne announced a “major housebuilding programme”, the Federation of Master Builders (FMB) has pointed out that developments are being stalled or held up due to the cost of hiring skilled tradesmen and with a shortage of apprenticeships the skills problem is not about to go away.

As interest rates remain low, demand for rental accommodation increases and the BTL mortgage market remains extremely competitive, yields are likely to increase. The inability to address the housing crisis will underpin house price stability and restrict supply.

Once the shock of the Autumn Statement announcement has subsided, landlords will realise that there are many positives about property investment for those who take a long term view.

About Tom Morgan

Founder of Jungle Property the multi award-winning letting agent based in Glastonbury, Somerset. I am passionate about property and Glastonbury and about providing the very best advice to anyone who wants the best return on a buy-to-let property investment. For an open and brutally honest opinion on anything in the Glastonbury property market please contact me via tom.morgan@jungleproperty.co.uk

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The supply and demand of anything will influence the price and this is certainly true with property. Here in Mid-Somerset demand can change quickly but the supply of new properties takes much longer.

The Conservatives pledged to build over one million homes by 2020. The National Housing Federation estimates that compared with demand, there is now a shortfall of more than half a million dwellings. Just 125,110 homes were built in England in the year to March 2015, according to government figures. That is about half as many needed to keep up with demand, and the problem is compounded every year.

Looking at the latest housing projections for Mendip the number of households will grow by an average of 391 a year between 2012 and 2037.

The registration of new properties with the Land Registry since 2012 were as follows:

• 2012 ~ 120
• 2013 ~ 190
• 2014 ~ 194
• 2015 (so far) ~ 134

It is clear from these figures the number of new properties being built is not matching the projections for the number of new households. Also rather worryingly many of the new properties are simply not affordable for most of the local population and certainly not for first time buyers. Our housing policy really needs a re-think because whatever the governmen is doing it’s simply not working.

Why can’t Britain build enough homes?

The key factors are:

• Skills shortage
• Planning delays
• Cuts in housing association budgets

The outcome of too few homes being built in Mid-Somerset means people are being priced out of buying their first home and renters are not getting choice.

Mid-Somerset youngsters are living with their parents for longer than ever before, because they cannot afford to get onto the housing ladder and growing families are unable to buy the bigger homes they need.

Also Mid-Somerset business owners need a flexible and mobile workforce – but the high cost of moving home and lack of decent and affordable housing are barriers to attracting and retaining high-quality employees.

Furthermore, building new homes is a powerful source of growth, creating jobs across the county and supporting 100’s of businesses.

The public have had enough of political rhetoric and we need to exert pressure on local MPs such as James Heappey to make the changes needed to get the needed homes built.

The landlords who provide homes for the (at last count) 7136 households in the Mendip private rented sector are part of the solution to the housing crisis but recent and forthcoming changes to laws and practices within the sector will unsettle many and put off many would-be buy-to-let landlords.

The days of sticking a pin in the property section of the local newspaper and seeing a healthy and almost guaranteed return on investment are gone. More than ever landlords need to engage expert advice, not just to keep on the right side of the law but to get the local knowledge needed to maximise the return on their investment.

About Tom Morgan

Founder of Jungle Property the multi award-winning letting agent based in Glastonbury, Somerset. I am passionate about property and Glastonbury and about providing the very best advice to anyone who wants the best return on a buy-to-let property investment. For an open and brutally honest opinion on anything in the Glastonbury property market please contact me via tom.morgan@jungleproperty.co.uk

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