Buy-to-let purchases fall by 50% year on year

Article is here

Scary numbers but why are they happening?

Numbers are always interesting but what is more interesting are the reasons behind them. Put bluntly: purchases are down because people think they can’t make money in buy-to-let anymore. A combination of the higher stamp duty, disallowance of wear and tear tax deductions, and Brexit… all play a role.

The reason that the government imposed the stamp duty and disallowed tax deductions was purportedly to cool the growth of house prices and to allow more first-time buyers onto the ladder. However, at the same time, the government has the help-to-buy scheme that helps first timers get their first house by effectively giving them more money which has the effect of pushing prices up even further so there are some counter-acting policies in play at the moment.

Is this really helping first-time buyers?

A stat I would like to see is how much first-time buying is up year on year. That would be a good indicator of whether the measures taken by the government have been effective.

So, does that mean buy-to-let is dead in the UK for the time being?

In my view, yes.Right now, you know all those books “Rich Dad, Poor Dad” and “Real estate riches” that tell you how to get rich by buying and renting out houses with little or no money down? Well, you can forget about that for the time being. Not one of them is relevant in the context of current government measures. They are dependent on easy credit (can’t get that now), not having punitive stamp duty (which we have now) and the ability to deduct expenses for tax purposes (can’t do that anymore).

Right now, you know all those books “Rich Dad, Poor Dad” and “Real estate riches” that tell you how to get rich by buying and renting out houses with little or no money down? Well, you can forget about that for the time being. Not one of them is relevant at the moment. They are dependent on easy credit (can’t get that now), not having punitive stamp duty (which we have now) and the ability to deduct expenses for tax purposes (can’t do that anymore).

If Brexit goes through and is not done well, there will be huge changes in law and tax to get the economy moving again. Don’t be surprised if buy-to-let comes roaring back if Brexit goes sour.

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