So, the Autumn statement is out and these are the key points I found interesting as a property investor:
Key points:
1. The UK is officially in a recession.
2. There will be a freeze in income tax thresholds but people will pay more in tax as their wages rise; which has implications for investors who are not buying under a company. Also for renters who will have less disposable income.
3. People earning £125,140 or more will now be exposed to the highest tax rate (down from £150k).
4. Capital gains tax threshold has been cut from £12,300 to £6,000. It will then be cut to £3,000 from April 2024.
Jeremy Hunt also acknowledged that high mortgage rates were not good but didn’t announce any plans to change it. Instead, he will give the Bank Of England free rein to continue to do what they think is best.
So what does this all mean?
Buying might be more expensive now but that doesn’t make it unprofitable.
People are panicking. Auctions have already started to get less traffic. I was able to scoop up a property with great value just last week, it seems the market has started cooling. This is the time as an investor to be alert but it’s more important than ever to be very clear on your goals for property investing.
What are you hoping to get from it?
Are you doing it for capital appreciation, a vehicle to grow your money overtime? Or are you looking to generate monthly cash-flow? The answer to this question would determine the best strategy for you. It would determine if you buy a property that you could rent out for 15-20 years while the value of the property increases, or you could turn it into a shortlet/holiday let for a premium. There are various ways to offset the potential losses from the higher mortgage rates and still stay profitable in BTL.
Your time frame….
Short-term is anything 6 months or less. Medium-term which is from 12-24 months or long-term. These time frames are crucial to be clear on. For instance, if you are a cash buyer, there will be opportunities in the short term. For longer-term investors considering buy-and-hold strategies, it would mean paying more attention to the impact mortgage rates will have on your overall portfolio.
Your exit strategy….
Getting clear on what you intend to do with the property and the end of your timeframe is crucial. Do you plan to sell or rent it out? Or would you prefer to remortgage and roll that money forward into another property?
