Many of us have dipped our toe in property investment, whether deliberately or out of necessity. Some vendors struggling to sell have opted to rent their own home rather than miss out on their new one while waiting for a sale. Others have decided to buy one or two rental properties rather than, or to supplement, their pension.
But, with every budget announcement from the Chancellor, there are winners and losers. And, landlords were definitely among the losers in the most recent one.
So, is investing in a second or another home still a good idea?
Well, first of all, if you are seriously considering purchasing a property as well as keeping your main residence, it could be worth acting quickly.
Buy-to-let landlords are set to be hit with new costs from April this year, when an extra three per cent Stamp Duty charge is introduced.
The charge, which the Government claims will free up housing for first-time buyers, will add thousands onto most buy-to-let sales.
For example, anyone buying a £200,000 second home now will pay Stamp Duty of £1,500. But from April onwards, the total bill will be £7,500 as they will have to pay three per cent for the first £125,000 and then five percent on any sum between £125,001 and £250,000.
Its a significant increase which will impact not just on professional investors, but on anyone trying to buy a holiday home or to purchase a property in the city where their child is going to university.
The extra charges come on the back of an earlier hit for landlords. The amount of tax relief for buy-to-letters is set to be phased away from 2017.
There are also extra legislative hoops to jump through. The Government has announced that all private landlords will now have to check new tenants have the right to be in the UK before renting out their property. There are some exceptions to the rule, including local authority tenants, student accommodation and long leases of seven years or more.
Further local authority initiatives are also piling the pressure onto landlords. In South Shields, for example, a mandatory accreditation scheme is to be launched to force property owners to bring homes up to standard.
But, even with those negatives, the North East buy-to-let market could still be an attractive proposition.
New analysis has estimated that over the next five years, the demand for rented homes nationally will rise by more than one million households, despite Government measures to help generation rent become generation buy.
Buy-to-let mortgage rates are also low, having followed residential deals down. That makes it easier to achieve decent rental yields, although fees do tend to be higher.
The right timing, the right price and the right mortgage deal are more important than ever, but buy-to-let could still add up for North East investors.
Martin Williamson is Head of Residential Property at Latimer Hinks Solicitors in Darlington. Latimer Hinks has a team of around 40 people serving private and corporate clients. For further information: www.latimerhinks.co.uk or call 01325 341500.
Please note: This article is intended as guidance only and does not constitute advice, financial or otherwise.
For further information please contact Martin Williamson