Market Appraisal – Looking Ahead in 2016
In general, 2015 was a prosperous year for the rental sector. We have seen increased rents and a busy year with very little down time.
Record rent levels have been achieved in some areas and properties have been let with ease having very little empty time between tenancies. However, there have been many changes in legislation which have proved to be challenging for both landlords and their agents alike. However at Sheldon Bosley we have remained ahead of the game with these changes and we are confident that we are on track, ensuring our landlords’ assets are protected and their tenants safeguarded.
2016 looks to be another challenging year in many ways and will also bring in various changes and additions to legislation. We do not predict a slowdown in demand with the market expected to remain buoyant and further market rate increases are anticipated. However, although the market is particularly good, we stand by our philosophy that a good tenant is always the most important consideration when letting a property. In a good market it is always tempting to inflate the asking price, sometimes beyond an achievable level. We are able to provide specific valuation advice and will guide you through the process with ease.
Sadly, the government have announced further changes that will increase the costs for landlords in 2016. Anybody buying a second home including landlords, will be required to pay an extra 3% in stamp duty from April 2016. Other tax changes have also been announced meaning landlords are likely to be able to claim less relief against their rental income. Due to this, we expect to see a slight slow-down in the number of new landlords to the market and the knock on effect of fewer rental properties. This will benefit those already in the market or those who choose to proceed against the odds, as we expect to see a shortage of properties available. We do not expect the level of those looking for rental properties to decline, if anything this is likely to increase. The result will be fewer properties and higher demand which can only mean an increase in rents. Perhaps a double edged sword but some good news in the end.
It is clear that several major changes initiated in 2015 will make their mark on the property market not just in 2016 but in the coming years. Most notably, first time buyers should see low interest rates continue in the short term and more supply in the medium to long term while buy to let landlords look set to suffer extra costs, which could lead to fewer rental properties as the slack is unlikely to be taken up by institutional landlords, so welcome to the next real estate rollercoaster!