Independent letting and estate agent, Benham and Reeves, has released its latest look at the London buy-to-let market, having surveyed over 5,000 buy-to-let investors on their current feelings around current investment and the future of the sector.
The research found that 73% of those asked considered property is still the best, least volatile long-term investment when compared to all other asset classes.
In the wake of a number of government changes to the sector, 66% believe that the UK Government would fail to implement any initiatives aimed to boost overseas investment in order to drive consumer demand.
With Brexit continuing to dominate the headlines with no end in sight, it’s no surprise that 72% of investors have had their outlook on the UK property market altered since the vote, with 68% now less confident in the market itself.
With more changes to property and investment laws on the horizon, 80% of those asked could be forgiven with being unfamiliar with the latest changes to the buy-to-let market.
Although it has only just been implemented, the recent changes to Section 21 notices have also had an impact, with 66% of investors now more cautious about investing.
However, opinion is divided over changes to buy-to-let tax relief and whether the sector still provided a good investment as a result, with 49% believing it is and 51% no longer sure.
The current financial landscape has provided some assurance, with 60% confident that rates will remain low over the next five years and while 66% aren’t as confident in an adequate return over this time period, 22% remain very confident, with just 10% not at all confident.
However, with buy-to-let always requiring a long-term investment outlook, this increased to 37% of investors feeling very confident that they will see an adequate return over the next ten years, with a further 6% stating they were extremely confident and 51% not as confident.
Despite the recent dent in sentiment, 83% of investors stated it was either unlikely or very unlikely that they would sell their property over the next year, with the majority (58%) staying put for five years.
But with market uncertainty still hanging over the sector, just 21% of investors would consider investing in a property in the next 12 months, although half of those asked would consider expanding their portfolio within the next five years.
Director of Benham and Reeves, Marc von Grundherr said, “The Government has really gone to war with buy-to-let investors of late and a consistent string of detrimental changes to the sector through stamp duty increases, tax relief changes and a ban on tenant fees has had the desired impact of denting industry sentiment and dampening appetite for future investment due to a reduction in profitability.
“However, for the institutional buy-to-let investor, this is but a mere blip on a much longer timeline and the overwhelming overtones are that while Brexit poses a challenging obstacle for the immediate future, the market remains the investment option of choice with many confident on a return further down the line.
“This is a testament to the durability of buy-to-let bricks and mortar in the UK as, despite a government-backed clamp down, it remains a lucrative business and one that continues to gain the backing of those that are on the frontline.”
|Q1 Generally speaking, do you consider property investment is the best, least volatile long-term investment across all asset classes?|
|Q2 Given the political uncertainty around Brexit, do you feel the UK Government will implement initiatives to boost overseas investment to help drive consumer demand?|
|Yes – it will||34%|
|No – it will not||66%|
|Q3 Has Brexit altered your current outlook towards investing in the UK property market?|
|Yes – it has||72%|
|No – it has not||28%|
|Q4 Are you now more or less confident in the buy-to-let market?|
|Same level of confidence||30%|
|Q5 The UK Government intends to introduce changes to property and investment laws shortly. With that said, do you feel you are familiar with the current changes to the legal landscape?|
|Q6 Will the proposal to stop evictions via Section 21 Notices affect your future investment making decisions?|
|Yes, it will make me more cautious||66%|
|No – will make no difference||34%|
|Q7 After UK Government changes to tax relief on Buy to Let, is property still a good investment?|
|Yes, it will||49%|
|No, it will not||51%|
|Q8 Do you think interest rates will remain low over the next FIVE years?|
|Yes – they will remain low||60%|
|No – they will increase||40%|
|Q9 How confident are you that property investment will likely provide an adequate return over the next FIVE years?|
|Not so confident||66%|
|Not at all confident||10%|
|Q10 How confident are you that property investment will likely to provide an adequate return over the next TEN years?|
|Not so confident||51%|
|Not at all confident||5%|
|Q11 With property sales prices down and fewer buyers, do you intend to sell your property THIS year?|
|Q15 With prices down, developers offering large discounts and weak sterling, would you consider buying a property NEXT year?|
|Yes – I would||28%|
|No – I would not||72%|
|Q16 With prices down, developers offering large discounts and weak sterling, would you consider buying a property within the next FIVE years?|
|Yes – I would||50%|
|No – I would not||50%|