Published: 26/01/2016The last 12 months have seen a particularly ebullient lettings market, with record prices being achieved over the late summer months. This level of activity inevitably contracted towards the end of the year, but the big question is how the rental market will develop during 2016.
Whilst there is little doubt that the appetite for rental property will continue to grow in line with more people wanting to live in the capital, there are question marks over the amount of availability. The government has clearly decided that private landlords are a source of untapped income, and following the Chancellor’s announcement in the Autumn Statement, an additional 3% in stamp duty land tax for those purchasing buy to let properties will apply. This is in addition to the gradual reduction of tax relief on the interest part of any mortgage, which will inexorably lead to a dampening of enthusiasm to owning a buy to let investment.
Throw into the mix a potential rise in interest rates later this year, which could eradicate profits from rent received, and suddenly owning buy to let property, on the face of it, seems markedly less attractive and is therefore likely to stifle supply.
However, for those who are already landlords, and/or still prepared to take the plunge, then it can only prove to be a good investment, as the disparity between supply and demand would lead to higher rents which, paradoxically, the government is keen to avoid.
The penalising of landlords has a very “the horse has bolted” feel about it and, in my view, we should all be trying to make living locally more accessible – I feel the recently introduced measures are likely to do the exact opposite.