Let's face it, there has been little for landlords to celebrate coming out of Government announcements in the past few years. With the increases in legislation, tax changes squeezing margins, and plans to scrap Section 21 repossessions, being a Landlord has never been tougher for many. A poll by the NRLA found that around 47% of landlords were considering leaving the private rental sector (PRS) and a 2020 survey by Fixflo found that 89% of landlords found it harder to be a landlord over the last 12 months.
So the announcement by Rishi Sunak for the summer budget 2020, which raises the stamp duty threshold to a whopping £500,000 has been welcomed by many in the industry, and general feeling seems to be that this will be a welcome boost for the property market. Although the new threshold is for sole residential purchases only, there is a knock on positive for investors and landlords also, as the additional SDLT (stamp duty land tax) will be on top of the new rates, not the old.
This means that for an average 2 bedroom property in Benfleet, retailing at around £308,000 your new SDLT on a BTL purchase bill is 3% or £9,240 instead of the previous 5% at £15,400, giving you a huge saving of £6,160. This is a big win for landlords considering that the most popular rentals in Benfleet, Rayleigh, Wickford and Canvey Island are 2 bedroom properties.
Taking a couple of factors into consideration, many industry experts believe that the rental market is set to surge in the next 5 years. The Institute of Chartered Surveyors predicted an increase of 3% per year to average rents over the next 5 years. The government has also announced that the new Green Homes grant will be available to landlords as well as homeowners, providing up to £5,000 vouchers to pay towards insulation and double glazing. This is particularly helpful now, given that from April this year, all rented homes are required to meet a minimum EPC rating of E, with the government planning to raise this to D rating by 2025 and C rating by 2030. The incentives to bring back furloughed workers and government investment in the hospitality industry means that unemployment may not be as high as many had feared, and so the rental market should continue to grow.
Combined with some lenders such as HSBC temporarily withdrawing their 90% LTV products, we may see some potential first time buyers choose to move into the PRS for the first time, or stay in rented properties for longer.
The most popular rentals in the South East of the UK continue to be flats, and with Benfleet and Canvey Island having flats as only 12% and 6% of housing stock respectively, compared to a national average of 18%, we may see rental prices in the region increase as demand outstrips supply.
So there we have it, with the increase in local demand, the Green Homes grants availability, bounceback in the jobs market and now the discounts available on SDLT, we may be looking at one of the best times to buy your rental investment property, or increase your rental portfolio in Benfleet, Canvey Island and the surrounding areas!