The Brit Love Affair With Property: On the Rocks?
Are Brits obsessed with owning property? The answer, according to new data from Eurostat, implies not. The data shows that 64.8% of Brits live in a property they own, compared to an average of 70.1% across the EU. Whilst Danes and Germans are much more inclined towards private rental, just 17.1% of Brits do. To explain the rest of the pie: those who don’t own or rent privately in the UK live in social and council housing.
Considering that house prices have gone up 47,000% over the last 90 years, against a rise of 5,413% in living costs, the financial attractions of buy-to-let (along with the failures of the pensions industry) are obvious. But are things about to change?
Is the buy-to-let industry on its last legs?
Mortgage eligibility changes, combined with action on stamp duty and tax relief, have had quite an impact. Higher rate taxpayers are seeing their returns drop by up to 40%, whilst basic rate landlords suffer a 10% fall in aggregate returns.
Nonetheless, there is optimism. Tony Mudd, of St James’s Place, is confident that “investors’ love of property will survive this”. He added that reasonable returns of 4 to 5% can still be gained, and those buying without a mortgage won’t be affected by restrictions on interest tax deduction.
Even if buy-to-let is waning in attractiveness, residential property is still good news. There’s no sign as yet that enough houses are to be built to meet the UK’s growing demand, so capital values are likely to keep on rising. What’s more, the rise of property tech companies developing new ways of gaining exposure for buy-to-let properties may well take care of some of the issues of this type of investment.
Enter Property Crowdfunding!
Property crowdfunding, for example, is part of this new wave of property technology. Crowdfunding represents another option for investors wishing to take a stake in the rental sector, and to balance off against the risk posed by any investment in property, the crowdfunding avenue does offer some attractive potential benefits.
Firstly, you cut out the hassle of managing a property yourself. No need to deal with tenants, maintenance or any other issues related to being a landlord. Exposure, too, could be significantly cheaper, and there may also be some relative tax benefits.
Whilst the 3% stamp duty surcharge remains, the returns are classed as dividends, which allows you to put them under the new £5,000 annual tax-free dividend allowance. And because the investment is structured within a separate company, you won’t miss out on the lower capital gains tax rates.
The House Crowd, of course, is a key player in the property crowdfunding revolution, even if we do say so ourselves! We are, therefore, more than aware of the benefits on offer by investing in property with us. But you should always remember that where there is investment, there is risk, particularly in the weird waters of the property market. That’s why you have to make it clear to us that you understand those risks completely before we let you invest your money. We love the fact, however, that we’re offering an alternative route, especially at a time when the government seem so determined to crack down on the buy-to-let industry.