Top reasons to invest in property in 2015

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10 Mar 2015

Top reasons to invest in property in 2015

Author: Michael Cook

Investment experts from Romans Lettings have explored the local marketplace and put together a list of the top six reasons to invest in property in 2015:

1. Mortgage rates are at an all-time low

Record-low buy-to-let mortgage rates are encouraging more people to purchase properties with the intention to rent them out.

Interestingly, nearly three in four people don’t think interest rates will rise this year, according to Romans’ latest property poll. Controversially, many reports suggest the Bank of England will increase its base rate in the second half of 2015, waiting until after the general election in May.

“Unfortunately no one knows when rates will rise, or by how much” comments Vincent Courtney, Managing Director of Sales at Romans. “Some experts predicted a small rise at the latter part of 2014, which didn’t happen, and some are now suggesting we won’t see any movement until 2016.

“What we do know is that interest rates can have a big impact on your mortgage repayments, and with rates remaining at record lows of 0.5% since March 2009, is it really worth the risk of waiting to see what happens to interest rates, if you’re thinking of investing in property?”

2. Pensions insightIf you’re over 55 your pension could finance property investment

The new pension rules, expected in April, will enable over 55’s to withdraw your entire pension fund in one go and only have to pay your marginal rate of income tax, compared to the 55% tax rate now. These new rules will be welcomed by many landlords, especially as the average deposit for a buy-to-let mortgage stands at huge £100,000, according to the Mortgage Advice Bureau, an increase of 15% from last year.

3. You could save a lot of money when purchasing investment property thanks to the Stamp Duty reforms

2014’s Stamp Duty reforms have introduced a progressive structure, similar to income tax, which Chancellor George Osborne says will benefit 98% of property purchasers, a tax cut worth £800m a year.

Lower priced properties benefit the most from the new Stamp Duty Land Tax; ideal for investors who tend to go for smaller one, two or three bedroom apartments or houses. The Telegraph has reported that these new rules will save landlords around £50million per year, based on investors buying properties at the current rate.

4. Existing landlords are growing their portfolios; don’t miss out on the opportunity to grow your own

43% of landlords own two or more properties, according to the Property Academy’s latest Landlords & Tenants Survey.

“This statistic highlights the growth of the buy-to-let market” comments Michael Cook, Assistant Managing Director of Lettings at Romans. “It suggests that many landlords have consciously opted to grow their portfolio and buy more properties because of the strength of this type of investment.”

Money and houses5. Rents are rising

Rents across the UK rose by 7.6% in the three months to December 2014, compared to the same period in 2013, according to the HomeLet Rental Index, and with Romans’ experts predicting price increases of 5-10% during 2015 more people are expected to look at buy-to-let opportunities. In fact, in the Landlords & Tenants Survey 32% said they are ‘highly likely’ or ‘possibly’ likely to add to their portfolio in the next 12 months.

6. Strong capital growth

There are very compelling statistics for capital growth over the next four years with average house prices in the south east expected to rise by 37.3% by 2019, according to Rightmove and Oxford Economics. Rightmove currently states that the average house price in the south east is £327,850, which could rise to approximately £450,138 by the end of 2019, based on these predictions.

Capital growth, alongside rental income, is the strongest return on investment a landlord will benefit from, therefore it’s vital that you seek the expert advice to ensure you purchase the right property in the right place.

Romans Lettings has been successfully advising and supporting property investors for over 25 years; the letting agents’ popular Investment Open Evenings attract new and experienced investors seeking advice on anything related to the buy-to-let market. Speak to the team at your local letting agents to find out more about your local buy-to-let market, or request a free rental valuation.

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