Now it’s 2018, and those levels of homeownership have slipped dramatically and now only 27.5% of Stamford 25-29 year olds own their own home and 48.5% of local 30-34 year olds (interestingly mirroring the national picture of 24.5% for the younger age cohort and 64.2% for the older 30 to 34 year range).
It’s just in this post credit crunch/Brexit environment, the use of higher interest rates wouldn’t directly affect landlords, as around two thirds of buy-to-let properties are bought without a mortgage. Therefore, an increase in interest rates would have hardly any effect on landlords but hit first time buyers - the very sector the government would be trying to help!
In the 1980’s and 1990’s, interest rates was the government’s weapon of choice to cool or heat up the UK housing market – and it did work – up to a point. However, interest rates also affected many other sectors of the UK economy (and not always positively). Also, given muted growth of real income in the past few years, an uplift in interest rates (from their ultra-low 0.5% current levels) would have a massive effect on Brit’s household disposable income. Yet, over 90% of new mortgages in 2018 being taken are fixed rate and with such low rates, it has made buying property comparatively attractive.
Instead, over the last 8 years the government has encouraged first time buyers and implemented taxes and restrictions on property investors. First time buyers have had the ‘Help to Buy’ Scheme, Stamp Duty Exemption and contributions to their deposit by HMRC. On the other side the coin, the way landlords were able to offset the tax relief of their mortgage payments against income has now changed for the worse, plus an increase in Stamp Duty and they will be hit with additional costs as the government will be phasing out fees to tenants in the next 12 - 18 months.
For resourceful landlords it’s all about looking at your property/s and ascertaining if your current portfolio, mortgage and gearing are designed to hit what you want from the investment in terms of current and future income, capital growth and when you plan to dispose of your assets.
In fact, some local landlords have strategically SOLD some of their portfolio to either reduce mortgage debt or more often to adjust their portfolio and buy other types of property that to help them meet their current and future investment goals.