1 Bedroom Maisonette, Tollgate Hill, Crawley

Anecdotal evidence from solicitors indicates that completion dates for property sales that have only just been started will almost certainly be after April 2016. For investors looking to build their property portfolios, this means (thanks to the Chancellor) you’ll have to fork out an extra 3% stamp duty on top of the purchase price.

So will it still be worth investing in Buy-to-Let property after April ?

The answer to this question will of course depend on a multitude of different factors, not least of which will be your own personal circumstances. Getting proper & up-to-date tax advice is increasingly important, as will be investing in the right property that fits within your overall investment strategy.  For example, are you looking for Capital Growth, Rental Income or a combination of both ?

For now, however, let’s take a look at a potentially high yielding property that has recently come on to the market with Astons estate agents at £125000. It’s a 1 bedroom maisonette in Tollgate Hill, Crawley and the agents state investment buyers only.  This could mean that the property is already tenanted and the current owner wishes to sell with the tenants in-situ. Alternatively, it could also mean that the lease on the property is quite short – so cash buyers only, as it will be difficult to get a mortgage. Of course, rather than speculate, if you’re interested in the property just give Astons a quick call and they’ll be able to tell you ! Here’s the Rightmove link for the property http://www.rightmove.co.uk/property-for-sale/property-53140177.html

 

Assuming that if you purchased this maisonette it would be an “additional” property & that completion took place on or after 1st April this year, you the would pay a 3% stamp duty surcharge. In pounds, shillings and pence that equates to £3750 ! So does this property stack-up in terms of an investment package ? To try and answer this question, let’s look at the figures.

Maisonettes like the one we’re considering here currently rent for between £600pcm & £650pcm. If you were to purchase the property for the full asking price of £125000, the gross rental yield would range from about 5.8% to 6.2%. So, pretty healthy indeed.

If, however, you were to take into account the additional 3% stamp duty and just add it on to the purchase price, the rental yields would be reduced a little to around 5.6% to 6.1%. Despite the additional stamp duty, therefore, these rental yields are still impressive when compared with the Crawley & UK-wide property markets. In addition, it has been reported that the government is going to allow the additional stamp duty surcharge to be deducted from any capital gain when the property is sold.

Hence, by carefully choosing the right property to invest in, decent rental yields can still be achieved despite the forthcoming 3% stamp duty hike heading our way  this April.

So, if you’re looking to invest & see a property that catches your eye (even if it’s through another agent), give us a call on 01293 515588. We’re more than happy to provide you with free advice and we can even visit the property on your behalf – and there’s still no charge or obligation on your part. Best to make use of this service before you part with any cash on surveys etc… ! Alternatively you can always e-mail us at crawley@northwooduk.com.

The opinions expressed in this article are those of the author only and not of Northwood. If you are considering investing in property, please make sure that you seek appropriate professional advice.