Rick Flay, managing director of Belvoir Sheffield the leading letting agent in Sheffield, today called the new Governmental reforms a ‘mixed bag’ for the rentals market.
Indicating four key areas which will affect the rentals market, Rick recognizes that changes to capital gains tax, mortgage availability, EPC’s and stamp duty, will all have a significant effect on the market as we see it.
With capital gains tax on non-business assets set to be imposed at rates close to income tax, the expected changes to the legislation will impact more so on investors paying the higher income tax rate and second home owners. For these groups, the rate of tax could potentially rise from 18 per-cent to 40 per-cent.
Rick, who specialises in letting out properties in Sheffield, added, “It is the likely assumption that capital gains tax will increase and I think that there are two schools of thought surrounding this. One is that people will be tempted to sell their properties to beat the rise and the second school of thought is that investors will tough it out.”
“I personally believe that property investors will not be selling because they will take a long term view. It is important to into account the rental that can be achieved and how that rent can be increased as the years go by. Even if tax rates increase and remain high the asset class still makes it an attractive investment. I would certainly advise any potential investor to seek help from a professional letting agent that will offer them with impartial advice.”
As far as buy to let mortgages in Sheffield go, Rick states “Under the last Government, there were huge problems for those seeking buy-to-let mortgages and first time buyers hoping to get onto the property ladder. The Government should begin lending to those with smaller deposits ie by increasing the loan to value ratio (LVR) and mortgage rates will need to come down in order to stimulate the market. This has been an ongoing issue, and in my view it is something that the new Government should really focus on as increased liquidity in the market will boost the whole sector.”
“Another major area for debate is certainly the rules surrounding stamp duty. The Queens Speech claimed that it was now ‘under review’, but in my opinion the new Government should abolish stamp duty on all property purchases up to £250,000 as it would stimulate both the first time buyer and buy-to-let markets. In a contradictory move, the new agenda pledges to keep energy performance certificates (EPC’s) but plans to scrap Home Information Packs.”
Rick added, “Although an Energy Performance Certificate (EPC) is still required for a rental property, I don’t think that they add any value. Here at Belvoir Sheffield, we find that many tenants are unaware of what an EPC is, they do not request them, and I think last year alone, only one tenant asked to see one. It would therefore be very interesting to see if they will be repealed in future.”
Belvoir Lettings Agency Sheffield is the One Stop Specialists for Lettings including Property Management, Tenant Find, Investment and Wealth Management Advice, Fit-outs and Renovations, Furniture Packs and Investment Property Insurances
