A new report from the Centre for Economics and Business Research in association with Shawbrook Bank has forecast that volume in the buy to let property market will decrease, but by 2021 the market will become stableonce more.
The report looked at various government changes to the buy to let market including, reduction in commercial interest tax relief as well as stamp duty increases. This resulted in less buy to let mortgages activity and fewer individual landlords. The report forecasts that the landlords who remain will be more “professional” and they will reverse the decline in the buy to let market.
This report also notes that investors are looking at purchasing property in the regions rather than London. This is because there are higher rental yields outside of London. The report’s authors say that:
“A flat housing market and limited capacity for rental growth in the capital means that other places in the country offer better yields to investors, especially cities with large student populations.”
The report notes that Brexit could result in fewer jobs in the City and this could lower London housing rents.
Karen Bennet, Commercial Mortgages director at Shawbrook, said that government regulations had a notable effect on the buy to let market, and this has impacted “amateur” landlords, but professional investors have continued to grow.
The report is optimistic about the long-term future of the buy to let sector, provided that both landlords and lenders adapt to changing market conditions.