Risks and Opportunities in the current Buy to Let Market - Nova

Risks and Opportunities in the current Buy to Let Market

Paul Mahoney:

Hi. I’m Paul Mahoney, managing director at Nova Financial and as many of you will know, we’re an independent property and finance advisory company. So I’m going to talk to you about some of the risks and some of the opportunities in the current buy-to-let market. So the main risks are associated with three changes that have taken place recently. The first is with regards to the way that mortgage interest is to be treated from a tax perspective. Secondly, in the stamp duty premium, and thirdly, the way that lenders now look at mortgage serviceability.

So, I won’t go into each of those changes now, but more so the effects. The issue that’s arising is those three effects mostly impact high value, low-yield assets, so predominantly London and the southeast. Now what that may result in is that people in London may find that their properties that are slightly cash flow positive will become slightly cash flow negative. They also might find they may not be able to borrow as much as they currently owe, which are two major risks, because that means that people are going to have to put more money into their properties. And to do that, they’re going to have to have confidence in making a profit on that money, which I’m not sure everybody has in the current market.

The flip side to that coin, though, is higher value, low-yield assets provide opportunity in that that’s definitely where the market is moving. If you’re getting the high-yield and you’re buying at a lower value, each of those changes affect you far less than the high value, low-yield asset. If you’d like to find out more about that, how you can potentially take advantage of some of the opportunities in the market at the moment, then please feel free to get in touch and we’d be more than happy to help.

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