After George Osborne’s hike to stamp duty taxes, landlords across the UK are understandably concerned about their profit margins. With a 3% rise across all tax brackets for those looking for buy-to-let property for sale, it’s not an insubstantial amount of additional cost; which leaves investors asking the important question – how can you ensure a good return after paying the extra stamp duty?
Unsurprisingly, landlords have been raising rent in a bid to recoup the money spent on stamp duty, not to mention the reduction in tax relief that they can now claim. However, according to insurers HomeLet, rent has not increased by as significant a margin as some predicted. According to their statistics, rents on new tenancies signed outside London were, on average, just 5.1% higher than the previous year.
In fact, in certain regions of the country, average rent figures had dropped; such as the North West of England, Yorkshire and the Humber. Across the entire country, the average rent a tenant pays (outside of the capital) is £764.
Investment Properties in London – Rental Rates
In London, however, it’s a rather different story. Rents of new tenancies signed in the three months leading to the end of April were 7.7% more than the previous year – making the average monthly rent an eye-watering £1,543.
From a landlord’s perspective, it’s difficult to see what other option they have than to raise rent – especially as investment properties in London still continue to increase in price.
Smarter Property Investment in the UK
It is still possible to find great property investment opportunities without charging a small fortune in rent. Here’s a few ways you can ensure you generate good ROI, without deterring tenants with formidable rental rates.
Buying a house at auction. Seek out opportunities to invest in a bargain property, rather than sticking to the traditional form of property buying via an estate agent. Buying a house at auction is a savvy move – which can save you as much as 20% off the average market price. These savings more than compensate for additional stamp duty costs.
Attend property seminars. The investors getting the best results in the UK are those who know the property market inside-out. If you haven’t already, make it your priority to brush up on your knowledge. There are many ways you can do this, but attending a property seminar is probably one of the quickest ways to get up to speed.
Take on a project. It goes without saying that properties requiring cosmetic or structural improvement are more likely to generate a good profit – both in terms of rent and capital growth.
The Buy2Let Shop in Bromley
If you’re looking for buy-to-let property for sale and want advice and support throughout the process, get in touch with The Buy2Let Shop. We’re a team of property investment agents in London, and we’ll help you identify the best property investment opportunities, plus assist with buying a house at auction. We also hold regular property seminars in London, designed to boost your knowledge of the market.