It’s bad news for property investors, as data published by payments firm, Worldpay, has shown that the UK has dropped a staggering 10 places in 12 months on the list of Europe’s best locations to invest in property. Last year, the UK was positioned number 15, now we are in place 25.
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 has caused this dramatic drop?
Landlords have been subject to major tax and regulatory changes over the last 18 months.
Since April 2016, landlords now must pay a 3% stamp duty surcharge on all new properties. There are some property types that are excluded from this, but the list is very restrictive. Properties valued less than £40,000 are also excluded. This is good news for buy to let landlords who are investing in areas with low property prices, but not for landlords in the South-East, for example, where the average property price is £386,607.
From April 2017, the tax relief that landlords can claim on mortgage interest payments is being scaled back. Previously, landlords could offset 100% of their mortgage interest against their profits. This is being phased out over the next three years and will be replaced by a 20% tax credit.
Mortgage lenders are also cracking down, and are asking buy to let landlords to produce more rent to cover the cost of mortgage payments.
From the beginning of this month, changes brought in by the Bank of England’s Prudential Regulation Authority, mean that landlords who own four or more properties will find it more difficult to get finance.
And we can’t forget to mention Brexit. The uncertainty that surrounds EU national’s status in the UK, is certainly putting some off investing in property here.
What compounds this news, even more, is that the average yields British landlords can expect to receive has fallen from 4.91% to 4% in the last 12 months. It is even worse for buy to let landlords who have invested in properties in London and the South-East where yields can be as low as 2%.
Who tops the list?
The five countries that topped the list were:
- Ireland (average yield 7.08%)
- Malta (average yield 6.64%)
- Portugal (average yield 6.43%)
- Netherlands (average yield 6.27%) and,
- Slovakia (average yield 6.12%)
Looking for property investment finance?
If you are considering buying an investment property in the UK, or are expanding your existing portfolio, speak to Chris about competitive, independent buy-to-let mortgages.
Tel: 01403 780 770