James Dodds, Lettings Director at Grosvenor
Do you remember the heady days of buy to let investment? That golden period when access to buy to let mortgages was straightforward, rates were low and the tax implications were much more favourable than they are now. I do, mainly as it wasn’t that long ago.
Tax treatment attributable to buy to let landlords has, over the last few years, thrown the lettings market a few curveballs. However, things are changing. In fact, if you’re a buy to let landlord – or are thinking of becoming one – then the good news is that letting a property is now more attractive than ever.
Only this week it was reported that the cost of renting a detached home has increased by nearly 10 per cent in a year. The findings from The Deposit Protection Services also revealed how demand for detached homes has significantly outpaced demand for semi-detached and terraced properties.
As a Cobham lettings agent, we’re witnessing the same upwards trend. In fact, when it comes to detached properties in Elmbridge, we’ve seen prices increase by much more than the national trend. The rental value for one particular property in Cobham that we marketed saw a year-on-year increase of 14 per cent, which boosted the landlord’s annual rental income by a generous £6,500.
From our perspective, there are two drivers for this increase. Firstly, there is a growing demand for high-quality properties in the area – and let’s face it, Elmbridge is home to an abundance of those. Secondly, there’s a scarcity of this calibre of property available to rent. Consequently, when they do become available, there is a great of deal of interest and people are often willing to pay above what we would typically consider market rate.
What does this mean for existing and would-be Elmbridge landlords? It means that if you have a detached property available to let, then now would be a good time to market it.
Interestingly, we’re also seeing a number of homeowners who, in a bid to render themselves chain-free in response to an incredibly buoyant market, are looking to sell their property and move into a short-term rental property. This means that it’s not only detached properties that are coveted – but properties that are available on a short-term basis, too.
Bank-busting returns haven’t been difficult to top over recent years given how interest rates have been so low for so long. However, this news arguably makes letting a property one of the best investments available right now.