With the rapid rise of Buy-to-Let throughout the UK, there are a few major hotspots which represent the most attractive investment opportunities to buyers. Two of the most significant of these regions are the South-East and the Midlands – but how do they compare?
Tougher conditions boost regional growth
Landlords have been on a roll in areas like London, where the possibilities for making a healthy profit from the rental sector have long been acknowledged. Yet recent changes are making this an increasingly tough market to crack. There are many reasons why investors are starting to turn away from the South East and seek new investment opportunities elsewhere, with the Midlands leading the way as a key area of growth in this competitive sector.
New tax rules affecting London landlords
One of the key concerns for buy-to-let landlords is the change to taxation, with the launch of Section 24 overturning existing tax conditions and affecting the income tax relief which landlords can claim on buy-to-let mortgages. This shift was first announced in 2015, and is currently being phased in, meaning landlords can now claim back only 75% of financing costs and by April 2020, many landlords could be seeing a heftier tax bill as the current rates are replaced with the basic rate of tax, currently set at 20%. These rules are still misunderstood by many landlords, yet those who were planning on investing in the buy-to-let market are looking at more attractive prospects than the London-centric offerings in the South-East. Whilst prospects for renting remain high here, so do the costs associated with buying, effectively pricing many budding landlords out of the market.
A boom in the Midlands buy-to-let market
The main reason for investment growth throughout the buy-to-let market in the Midlands is the commensurate rise in tenants seeking a place to call home. Property prices in this area are set to exceed the national average soon, making this a fantastic time to invest for those seeking a foothold in the UK as a buy-to-let landlord. In a major shift, 16% of London’s landlords admit to recently selling some of their property – perhaps recognising the possible depreciation of their assets and discovering new and profitable frontiers. According to the Office for National Statistics, Londoners are on the move – and more have relocated to the Midlands than anywhere else in the UK. throughout the last twelve months.