Landlords in UK say long term growth is more important than tax efficiency

Buy to let landlords have dismissed concerns about the impact of changes to mortgage tax relief and consider long term growth as more important, new research has found.

They believe that property is a secure, long term investment and are prioritising long term growth rather than looking for tax efficiency, according to the research from buy to let investment platform Property Partner.

Overall 57% of landlords have not changed their view of the buy to let market despite April’s cut in mortgage tax relief and last year’s stamp duty increase.

The survey also found landlords are half as likely to consider risk avoidance as a priority in property investment decisions at 7% compared with other investors at 12%. This is likely to be because they feel assured the long term trend will continue with residential property proving its stability despite political upheaval.

The research points out that since records began in 1972, there has been no five year period showing a negative total return for investment into UK residential property.

However, despite this bullishness about UK property over the medium term, Property Partner’s experts are surprised at how few investors are diversifying into property.
Only 19% of investors sees property as a good way of diversifying their assets, something analysts say is key in today’s economy.

The research also looked to the future of the traditional buy to let market and found the vast majority of potential landlords believe there are difficulties in investing in residential property.

Amid the historic barriers to entry, just 11% of would be landlords believe investing in property is easy and the majority of those, 51%, are put off by having to manage tenants.

‘This research underscores the confidence being shown in the buy to let sector across the UK. It really highlights that, despite efforts to increase the tax take from landlords, investors continue to be bullish and see property as a secure, long term investment,’ said Dan Gandesha, chief executive officer of Property Partner.

‘With no end in sight to the acute shortage in housing stock, there is an inevitability to the continuing upward pressure on prices. In the long term, prices are expected to rise faster than the rate of inflation, economic growth and wages, despite recent political uncertainty,’ he added.