Buy-to-let booms despite triple whammy

Interest in buy-to-let is booming despite Brexit. Extra stamp duty and tax changes have also failed to dampen the market
Interest in buy-to-let is booming despite Brexit. Extra stamp duty and tax changes have also failed to dampen the market
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Investors have been hit by a perfect storm but buy-to-let is still booming in Yorkshire. Sharon Dale reports

Property investors in Yorkshire remain undeterred by the political and economic challenges arising from Britain’s decision to leave the European Union, according to new statistics.

The recent three per cent stamp duty surcharge for those buying extra homes and the reduction in tax relief on mortgage interest for landlords have also failed to dampen interest in buy-to-let.

Research by residential sales and letting specialists, Linley and Simpson, shows that the county has enjoyed a post-Brexit bounce in buy-to- let activity in August. A record 37 per cent of all sales achieved last month in the company’s 11-branch network, spanning North and West Yorkshire, were to investors. This represented a 78 per cent increase between July and August.

They invested more than £3.5m, buying properties ranging from £55,000 to £315,000. Two-thirds of properties were flats and the overall average investment property sold for £140,000. The most popular area targeted by those buying-to-let was Harrogate. Ripon was the next most popular, followed by Roundhay in Leeds and Leeds city centre. The latter two areas have also seen a surge in rental popularity.

The agency says that 45 per cent of its buyers are new investors and 55 per cent are seasoned landlords. Almost all, 92 per cent, are from Yorkshire. Director Will Linley welcomed the figures as a sign of the strength of Yorkshire’s house sales market and the resilience of the private rental sector.

“Britain may have voted to exit the EU but the early signs are that investors are not exiting the property market on the back of it. In fact, it is quite the reverse,” he says.

“In common with other sectors, the property market was filled with uncertainty after the referendum. The hype billed it as a journey into the unknown and I think it is fair to say nobody knew for sure what would happen.

“But any concerns over the impact of Brexit are certainly calming, if not ridden out completely, judging by our research. These figures are among the first indicators we have had since the vote and they highlight confidence in the market right now.

“The Bank of England’s decision to cut the base rate last month for the first time in seven years may also have helped to instil a feelgood factor.”

Mr Linley adds “Our figures would suggest that, for the moment at least, they have failed to dampen the enthusiasm among investors for rental property. And that the Yorkshire love affair with buying and letting a home is poised to continue.”

The post-Brexit surge also comes at a time of peak-demand for rental properties. August has also been a record month in Linley and Simpson’s 19-year history with 347 new tenancies. The most popular areas have been Leeds and York.

Over in Hull, a buy-to-let hotspot thanks to low property prices and high yields, agents say it is business as usual for investors.

Stuart Goff, who runs three branches of Hunters estate and lettings agencies in Sheffield, agrees: “Over here it’s like Brexit never happened. It has washed over us and while the extra stamp duty is unpalatable, it doesn’t make a big difference when you are buying a rental property for between £100,000 and £150,000. Investors are prepared to absorb that cost if they plan to keep a property for ten to 15 years.”

He adds that low interest rates on savings, stock market volatility and poor pension annuities are enticing more people to put their money into buy-to-let. His offices have seen a 38 per cent rise in the number of rental properties they manage and an eight per cent rise in the number of new landlords so far this year.

“You can get at least a five to six per cent yield on a rental property and that can rise to 12 per cent on a HMO, then there is capital growth if you keep the property long enough,” says Mr Goff.“People are questioning what to do with their money and bricks and mortar is the obvious answer.”

*Linley and Simpson has a buy-to-let servive, www.linleyandsimpson.co.uk