Hertford 01992 504644
Ware 01920 484448


Landlords: 2014 will be even better

Landlords: 2014 will be even better

Buy-to-let boomed in 2013 and experts say next year looks even rosier.

The housing market is “unrecognisable from 12 months ago”, said one property   commentator last week, and a wealth of statistics bear him out. During 2013   house price growth has rippled out from the capital to touch every region.   Mortgage lending and transaction volumes are dramatically increased. Rents   are stable. Mortgage costs remain at record lows. Together these factors   appear set to deliver an attractive rental yield plus the bonus of capital   growth. Is it any wonder that two in three landlords plan to add to their   portfolios in 2014?

House prices in 2013

At the end of 2012 price increases were confined to London and other, isolated   hot spots. The January 2013 data from Nationwide Building Society, measuring   price changes from December 2011 to December 2012 – even including the   capital’s stronger performance – showed a national fall of 1pc. That put the   average price at £162,262.

Move on a year and activity has rocketed in 2013, in the form of increased   transaction numbers and total mortgages lent, propelling prices along the   way. Nationwide’s latest data shows the average price is now £174,566 – an   increase of 5pc. And that is just one measure of many. Halifax, which   operates a measure like Nationwide’s based on its own lending, puts the   figure at 7.7pc. The two official measures most relied upon by the   Government, which come from the ONS and the Land Registry, put annual growth   at 3.8pc and 3.1pc.

Last month the Bank of England responded to these worries by redirecting its   Funding for Lending Scheme away from residential property lending. The   scheme had the effect of reducing mortgage rates and, without it, rates may   rise again – although there is little evidence of that yet.

Prospects for 2014

The Office for Budget Responsibility, adviser to the Chancellor, now predicts   house prices to rise 27pc by 2018. Landlords are expected to rapidly grow   their borrowing to expand. David Whittaker, of specialist landlord broker   Mortgages for Business, predicted a 25pc increase in business next year.    “The intention of landlords to expand further demonstrates that demand for   rental property shows little sign of waning,” he said. A survey of 300   clients found 57pc wanted to buy further property in 2014. Of those already   owning more than 10 properties the proportion was higher, at 66pc.

A rosy outlook does not mean all landlords make easy money. Problem tenants   always cause difficulties, such as those faced by Vicky Moller (above). Tax   treatment of Britain’s 1.2million landlords is also expected to tighten.   Capital gains tax reliefs were trimmed in the Chancellor’s Autumn Statement,   and some expect further, similar measures to be introduced in 2014.