Landlords benefit as the letting market remains resilient in 2016
- 23rd December 2016
- Landlord Property News
Fundamental strengths of London’s property market remain as the capital continues to attract students, employees and businesses
With the major political shocks of 2016 now having been delivered- the Brexit vote, the US presidential election and the Autumn Statement- the London property market has still retained its strength as an investment option. Indeed many investors plan on expanding their portfolios.
Investors in the residential buy-to-let (BTL) market have seen especially strong returns. Figures from earlier this year show that the average annual BTL property yield in London, including annual capital appreciation, is 4.6%. By comparison the yield on a UK five year Government bond is only 0.56%.
Since 2000, total returns on buy to let property have averaged 10% per annum and it is reasonable to expect that total returns will continue to perform well.
Going into 2017, landlords will face increased regulation, as the government is effectively passing to them the responsibility for checking their tenant’s right to rent by taking up references. These changes, along with new taxation rules, will act as a barrier of entry to the market and benefit those landlords with low gearing who plan to hold their investments for the long term.
Although there are more concerns about the impact of the Brexit vote, London’ BTL property market remains fundamentally strong as it continues to attract graduates and young professionals coming to study and to work in the capital.
Our current monetary policy has acted as a further stimulant to the BTL market as low interest rates have increased the availability of attractive fixed-rate BTL mortgages.
Stephen Ludlow, chairman of ludlowthompson, comments: “Buy-to-let property investment has provided strong returns in 2016 despite economic uncertainty, triggered by the Brexit referendum.”
“We trust 2017 will be free of the kind of major political shock we witnessed in 2016, and against this background the property market should continue to hold firm.”
With 2017 likely to be free from the kind of major political events as witnessed in 2016, the property market should continue to be highly robust.
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