I am of the opinion that buy to let
investment in Stoke on Trent, in the long-term, will bring substantial returns
for landlords, irrespective of latest regulation and tax changes.
Taking a very conservative (with a
small ‘c’) view, I believe landlords will see a projected net profit of £200,678
per property over the next 25 years through capital gains and rental. When inflation is taken
into account that works out at £118,199 (in today’s money) or around £4,728 per
year. The breakdown applies to a basic tax-paying landlord placing a characteristic
25% deposit on a £91,700 terraced/town house property.
Capital gains make up a substantial part
of a landlord’s returns. Again, being conservative, I have assumed that Stoke
on Trent house prices over the next quarter century (between 2018 and 2043)
will rise at half the rate they did
between 1993 and 2018 (the preceding 25 years), therefore the example Stoke on
Trent property in the previous paragraph would grow in value to £208,251, providing gross capital gains of £116,551.
A typical Stoke on Trent landlord
receives, on average, rent of £5,400 per annum per terraced/town house property
and so, over a 25-year period, that example property would generate a total
rental income of £206,415 (again – very conservatively assuming a compound annual
growth rate in the rent of 1.71% per annum).
Now of course I have had to make
assumptions to reach these figures, yet I hope you would agree, I have been
very unadventurous with my assumptions.
The Stoke on Trent (and UK as a whole) buy
to let property market is experiencing a massive sea of change. Regulation and
tax changes have altered the dynamic in the property market, diminishing its appeal
to inexperienced and amateur landlords, and these new tax changes mean higher
tax bills for higher rate tax landlords. Yet, despite these rising costs, there
are still healthy returns to be found in Stoke on Trent buy to let investment for
knowledgeable and steadfast landlords. Nonetheless, the days of anything
making money and idle speculation are long gone.
Buy to let is a long-term business undertaking,
necessitating commitment and expertise. Don’t put your head in the sand and
think it doesn’t affect you. Stoke on Trent buy to let landlords must be equipped
to start business and tax planning, take portfolio management advice to ensure
their investments will meet their investment goals, appreciate the risks as
well as the rewards, and, most crucially, the obligations they have towards
their tenants.
If you are a Stoke on Trent landlord, irrespective of whether you are a
client of mine or another agent in Stoke on Trent (or even you do it yourself),
feel free to drop me a line or pop into the office for an informal chat on the
future direction of the Stoke on Trent rental market and where opportunities
may lie.
