Published: 31 May 2019
There are two ways you can look at the recent history of the buy-to-let sector. One way is that it’s a sign that the government essentially wants to (semi-)nationalise it by the back door and the other is that even though the government may not really have known what it was doing either, the fact still remains that the recent shake-up was, ultimately, a benefit (if not intended that way) since it helped to shake out “accidental” (and other amateur) landlords who didn’t necessarily understand what they were doing, leaving more space for people who did.
The government’s stated intention has been to make life easier for first-time buyers while also fixing “the broken rental market”. What this has meant in practical terms is basically offering “carrots” to first-time buyers (like discounts on Stamp Duty and special ISAs) while keeping the “sticks” for landlords (additional Stamp Duty and reduced Mortgage Tax Relief plus increased regulation).
On the one hand, this has created a pool of first-time buyers to buy the property put up for sale by landlords exiting the market. On the other hand, it has reduced the supply of available property for those who want (or need) to rent. This basically means that for those landlords who stayed in the market, the dynamics of supply and demand are essentially much as they always were - and may be set to improve.
In principle, both mortgages and rent have to be paid in full, on time, every month, or else you risk losing your home. In practice, renters have quite a bit more room to manoeuvre than homeowners. Not only are many landlords prepared to be at least a bit flexible if renters are having temporary cash-flow issues, but even when they are not, renters have the ability to size-up and size-down much more easily than those who have bought and, possibly even more importantly, they are usually able to move from one area of the country to another a whole lot more quickly, which can be very helpful from the perspective of getting the job which is best for you overall, rather than having to take a job which is (reasonably) near to where you own a home.
Birmingham, Liverpool and Manchester have long been attractive destinations for property investors due to their combination of respected universities and growing economies which act as a magnet to young adults.
These three cities are still great places to invest, but now that they are so very well known, some property investors may wish to look further afield to more up-and-coming destinations such as Bradford and Leeds, both of which contain sizable populations of young adults, both students and professionals.
Nottingham is another good option, although its university has kept it on the property-investment radar, over recent years it has been somewhat eclipsed by the growth of its northern neighbours and could be ripe for rediscovery.
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