The UK housing market has been in turmoil for some time now, especially for property investment. With house prices going up, it was almost too good to be true and just as soon as profits were booming, the government slapped taxes here there and everywhere to put the celebrations firmly on hold for another couple of years.
According to Chancellor Philip Hammond’s Spring Budget, the UK economy will grow by 2% in 2017 meaning more money but not necessarily more homes to buy. To top this, the government want to get on top of borrowing which is potentially bad news for mortgage rates.
According to the BBC, many buy-to-let landlords will see the amount of tax relief that they can claim on mortgage interest payments cut over the course of four years from April. They will only be able to claim at the lower rate of tax, not the higher. This is because the focus is now on first-time buyers, and helping them find affordable property rather than stay in the money-draining world of renting.
The chancellor announced in his budget that the government will be launching a new NS&I bond. Available from 2017, the NS&I account will pay a fixed rate of 2.2% on deposits of up to £3,000. The maximum total interest available on the account is £202 before any tax is accounted for.
Other options for first time buyers still include the Lifetime ISA, Help to Buy ISA, Help to Save (set to launch in April 2018), Cash and stocks and shares ISAs and finally Tax-free property ISAs that certain investors allow. Despite predictions for mortgages looking gloomy, many lenders are offering excellent rates over their long-term mortgage plans.
The Telegraph states that if you’re worried about a potential rise in interest rates on mortgages then you should secure a decent mortgage now that will secure you through the next ten years. “Historically borrowers have shied away from longer-term fixes for fear of missing out on better rates that might become available later on,” says the article. However, bank rates are at an all-time low of 0.25%, so you shouldn’t be concerned that they will be beaten.
If you’re worried about the future of property investment and the best route for you then you should talk to an expert – Jason Harris, First Urban director, has been in the industry through many economical changes. Jason’s career in property investment began in 1986 and he has now built up a wealth of experience when it comes to looking for development and planning opportunities. Connecting with likeminded individuals may also lead to you finding out about new opportunities so it’s worth reaching out.