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Are Brits Falling Out of Love With Property?

More than half of UK investors no longer believe property is a good proposition, a survey has revealed.

Research by Rathbone Investment Management found less than a third of people now see property as one of their main investments.

The change in sentiment toward the once popular asset class comes amid a raft of new legislation which has reduced the benefits of owning a buy-to-let home. Anyone buying a second home must now pay an additional stamp duty levy of 3% of the property’s value. Meanwhile, from 2020 landlords will no longer be able to offset mortgage payments against their tax bill, and wear and tear allowances have become less generous.

A survey of 1,000 UK investors and 500 high-net worth individuals by investment house Rathbones found just 7% of people have plans to increase their exposure to the property market.

Research by Aldermore Bank found 25% of landlords think tax relief changes are the main challenge to investing in buy-to-let property, while 22% are concerned about the additional stamp duty levy. Its research found 17% of landlords are planning to increase rents to cover higher costs.

It is thought that rising costs are more likely to put off the 49% of landlords who have just one buy-to-let property than portfolio landlords. According to Statistica, some 27% of landlords own two or three properties, 10% own four or five, 7% between six and 10, and 6% have more than 10 properties in their portfolio.

Robert Szechenyi, investment director at Rathbones, said: “Recent changes to tax and regulatory treatment of buy-to-let has caused investors to take a step back and assess the viability of these investments.”

Those with more than £100,000 to invest were more positive about the outlook for property, but 38% still said it was not a good investment.

Nearly Half Favour Property Over Pension

Property has, until recently, been an incredibly popular place for Brits to stash their cash as UK homeowners looked to cash in on soaring house prices. A recent survey by the Office for National Statistics found some 49% of people felt investing in property was a better way to save for retirement than putting money into a pension.

Indeed, a quarter of high-net worth individuals surveyed by Rathbones said they had accumulated their wealth through property. Some 17% have investments in private real estate, 8% in commercial property and 5% in land.

But that may be about to change. Research by the National Landlords Association earlier this year found 20% of members plan to sell a property in 2018. Figures from trade body UK Finance show just 5,500 buy-to-let mortgages were completed in March – some 19% fewer than the same period a year ago. Uncertainty around Brexit is thought to also believed to have contributed to dampening demand.

Szechenyi added: “While it’s understandable that property has been a popular investment in the past, it’s now making less and less sense. Not only are returns being impacted by increased tax, but it can prove high risk due to a lack of diversification – property investments require a large amount of capital to be held in one single asset and landlords will often hold a number of properties within one region.”

To tackle this, some investors are turning to pooled funds as an alternative way to gain exposure to the UK housing market. Indeed, some £26bn was poured into property funds in March, according to latest figures from trade body the Investment Association.

Charles McDowell, commercial director at Aldermore, said: “Despite recent changes, many people still view buy-to-let as a good investment. There is no denying that the market has taken a bit of battering thanks to regulatory, underwriting and tax changes but there remains a net sense of optimism among landlords.”

Source: Yahoo Finance UK

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Over half of UK investors no longer see property as a good investment

Over half of UK investors no longer view property as a good investment, according to a new survey commissioned by Rathbone Investment Management.

The introduction of an extra stamp duty levy as well as new regulations by the Prudential Regulation Authority affecting landlords has led to many investors re-evaluating property as an investment, according to Rathbone.

Those investors with over £100,000 of investable assets were slightly more optimistic about the property market, the research found, with only 38 per cent viewing it as a poor investment.

The survey showed that a quarter of high net worth investors currently own buy-to-let properties; however, just seven per cent plan to increase their portfolio.

The Rathbone survey comes in the wake of research by the National Landlords Association which reported in January that 20 per cent of its members planned to sell a property in their portfolio in 2018.

Robert Szechenyi, investment director at Rathbones said: “Recent changes to the tax and regulatory treatment of buy-to-let has caused investors to take a step back and assess the viability of these investments.”

Property has traditionally been a popular investment across the UK, with 49 per cent of Britons surveyed by the ONS saying that investing in property instead of a pension was the best way to save for retirement.

However, Szechenyi said this may be about to change.

“Whilst it’s understandable that property, and in particular residential property, has been a popular investment in the past, it’s now making less and less sense,” he said.

“Not only are the returns now being impacted by an increased rate of tax, but they can also prove high risk investments due to a lack of diversification.

“Property investments require a large amount of capital to be held in one single asset and landlords will often hold a number of properties within one region.”

The research from Rathbone comes as data from Rightmove published today found that asking prices in London were down 0.2 per cent in May compared to the same month last year.

Source: City A.M.