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      The Latest Obstacles for Buy-to-Let Investors: Why Property in the North West Is the Answer

      Over the last year, the government has been attempting to make it increasingly difficult for landlords to enter the Buy-to-Let market, adding further obstacles in an attempt to alleviate a shortage of property for first time buyers, thus trying to keep prices subdued. Buy-to-let investors now face tougher conditions than ever before, with tough new legislations and the tightening of affordability checks by lenders, these are just some of the problems causing landlords to run for the hills. Despite this the government has now decided to add a few more complications to the equation.

      The first of these is ATED (Annual Tax on Enveloped Dwellings) tax. This tax was initially put in place back in 2012, to stop wealthy buyers from putting properties into companies in order to avoid duties. This became known as the Mansion Tax. This tax had a threshold of £2million on inception, although now the government has decided to drop this to £500,000 meaning it will now capture many more properties, no longer just the so called ‘Mansions.’

      In addition, as it is aimed at companies where landlords now place most of their properties, landlords, if not careful, could get caught out and end up paying either heavy taxes or fines. In truth, Landlords who rent privately are okay, but the requirement now is they have to file returns in order to avoid both this tax and any penalties. In short, this is just another consideration that Landlords have to take on board when managing their portfolios, and if they are not vigilant it could end up costing them dearly.

      So what you may ask, is what does this mean to you the investor, and why should the North West of England be the answer? Well in short, this new threshold will impact on a vast amount of property in London and the South East given the price levels seen in this part of the UK. This means that you need to find an area that offers great growth potential, but as yet does not hit these higher levels. This is where the North West represents both great value and strong price growth. The area continues to grow and shows little sign of abating with the media industry now declaring this it’s new unofficial home and associated industries following, along with large financial institutions and International businesses all basing their HQ’s in this part of the country. Despite all these positive drivers, Manchester and Liverpool manage to escape the tax, where average house prices sit some way off this level. Your average 2 bedroom apartment in Manchester city centre now costs around £210k, in Liverpool £170k, with the average in London sat at £475k. From this, as an investor you can look at the likes of Manchester and Liverpool and know that for the time being you will not be impacted by this Mansion Tax.

      If this wasn’t enough, the next piece of legislation to hit Landlords is the EPC certification bands, and the need for all landlords to hit certain criteria, and if not put right, will face punitive penalties. Rating tables presently have a system from A to G. From April next year, all properties tenanted out will have to hit an E rating minimum, with many believing this will even rise to a C rating in the not too distant future. So how would this benefit the new and off-plan market place?

      Well all new properties have to hit the highest ratings to meet the latest building regulations, which means as a Landlord your properties are immediately compliant with the new laws, with no need to do any expensive remedial work, something that you will have to consider with older homes before you can rent them out. Another factor is that all prospective tenants will be very aware of these new rules and will in many cases favour new builds as they know these properties deliver on these promises.

      For more information about the new obstacles Buy to Let investors can face, and how these can be overcome through off-plan investment, call us today to speak to one of our property experts.

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