While the UK Government seeks to cool the buy-to-let sector we hear that the country will continue to be a leading destination for global money looking to invest in property.
Property Frontiers - a property investment advisory service - have reacted with dismay to news the UK Treasury has banned estate agents from levying letting fees on tenants.
Letting fees will now be passed on to the landlord, something that horrifies Ray Withers, CEO at Property Frontiers.
"The prospect of a silver lining of any kind faded fast with news overnight heralding a now-confirmed ban on lettings fees. The Chancellor in fact targeted landlords specifically with the rebuff: 'landlords appoint letting agents and landlords should meet their fees’” says Withers.
“It is not difficult to imagine a farcical parlour game in which the Treasury passes the cost from tenants to agents, who pass it to landlords, who in turn pass it back to tenants,” says Withers.
Withers believes the only part of the chain at no risk of incurring the cost is the Treasury itself, “and indeed a subsidy for agents to charge extortionate fees is ridiculous”.
Despite Withers’ strong feelings, he still believes it’s a great time to be a landlord, with the Chancellor indeed cementing a commitment to housebuilding with a £2.3bn fund for 100,000 new homes in high demand areas, and supportive infrastructure around the new developments.
Property Frontiers have been helping property investors across the globe since 2004, which includes a majority of UK and ex-pat clients.
As a company they are bullish on inward investment thanks to the decline in the Sterling making the UK market look attractive to an international market.
“The Brexit vote has presented an opportunity for a concerted pivot in marketing to our international client base. Focus remains on cities in the UK and we certainly don’t intend to abandon the market we understand best and believe to be extremely resilient,” says Withers.
The award-winning company, which boasts over 2500 clients and has sold property in more than 45 markets, is currently focusing its efforts on the UK.
Withers believes the current currency exchange makes it the perfect place for investment.
“International buyers stand to make huge savings on British property right now and we have seen a recent surge in interest from particularly Chinese investors over the past few days, while those with pounds to spend might also prefer to invest them at home to avoid pain on the currency exchange,” says Withers.
Autumn Statement Commitment to Home Building Welcomed
Following this weeks Autumn Statement made by new Chancellor Philip Hammond, Withers was encouraged to find a sensible commitment to house-building.
Although further restrictions in the buy-to-let industry were deemed disappointing.
Property Frontiers specialises in buy-to-let investments in many cities around the UK and as far abroad as Asia, so Withers was hoping for a more positive statement regarding the industry.
"With landlords still reeling from Osborne's final statement, we had been hoping that Hammond's first would also offer them some conciliatory breathing room in this area. A reversal of the recent changes around stamp duty and tax relief on mortgage payments, as a string of industry bodies have called for, was always a long shot and did not happen,” says Withers.
Another encouraging takeaway from the autumn statement for Property Frontiers is a clear indication that the government understands the need to make the rental sector more affordable in addition to beefing up its traditional focus on house building.
“There is however, important work to be done on that front. 'Just about managing' families are more than twice as likely to rent privately as to own their own homes and the Treasury is clear about its intention to help would-be buyers get a foot on the ladder,” says Withers
But whether these new houses become available for homeowners or are snapped up under more ‘help-to-rent’ schemes remains to be seen.
But there is one thing that Withers is advocating, and that is investing in property.
“It is not such a bad time to be a landlord: mortgage rates are at historic lows, and Savills projects rent increases of around 19% across the country in the next five years,” says Withers.
With house building now a priority on this government’s agenda, the buy-to-let bubble still hasn’t quite burst.
With a further commitment from the Conservative party added to tenants over letting fee’s, what will be interesting to see is whether this bill instead gets implemented in a rent increase, and how (and if) the government will tackle that.