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Building and protecting your wealth

Is Investing In Bricks & Mortar Still Worth It?

Up until a few years ago, owning a property was a great investment, providing you with potentially great profits when the time came to sell. It was one of the most common ways to save for your retirement fund. Bricks and mortar were thought to stand the test of time but is it still worth it these days when you take into account the fees and taxes that come with having a property portfolio?


This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.


What’s changed in building lucrative property empires?

Tax, property price inflation, legislation changes, and with regulations being tightened, it’s questionable whether owning a property is actually worth it anymore. There are pros and cons of property investment.

3 recent detrimental property changes are:

1. A cutback in mortgage interest relief
Since April 2017, mortgage interest relief has been slowly reduced down to the basic rate of tax.

What does this mean for you?
Landlords who appear in the higher tax bracket (40% – 45% tax), will now only get tax relief of just 20% on mortgage interest payments. This will come into full effect in April 2020, once the new mortgage interest relief tax is executed.

2. Stamp duty increases
From April 2016, people wanting to buy additional properties to add to their portfolios, such as buy-to-let investments or second homes, became susceptible to a new stamp duty surcharge. Extra properties are now subject to an added 3% charge on top of any standard rates.

What does this mean for you?
If you’re planning on buying a new property (on a buy-to-let basis) for £200,000, you are now expected to pay a stamp duty fee of £7,500 instead of £1,500. An incredible jump in costs.

3. Wear and tear allowance banished
In April 2016 Wear and Tear Allowance was abolished and replaced with the Furnished Lettings: Replacement of Domestic Items Relief.

What does this mean for you?
You can no longer take 10% of rent from profits (on the basis of wear and tear from your rental property) when working out your tax bill. The replacement relief only allows you to take the actual cost of buying new items for your rental property when the old ones wear out.


The future isn’t bleak just yet

There isn’t a magic formula to buying property but if you look into each investment thoroughly you can still reap the rewards later on. Positive attributes, such as a property in an up and coming area with the right specifications, may still yield good returns. Look at the benefits over a long-term investment point of view.


It now costs more to get yourself onto the property ladder

A property can help support your retirement plans and can even work as a back-up option if you need to downsize to release some equity from property. The best place to start is to discuss investment options with an Independent Financial Adviser. They can weigh up where your money is best invested and can help you make the best choices to suit your later life. 


Need help with your property investment?
Mortgages | Buy to Let | Property | Mortgage Planning |

Dental & Medical Financial Services have been helping doctors and dentists with finding low-cost mortgages for your home and investment properties for over 25 years. Call Chris to discuss your options.

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