As if this wasn’t enough, the government also introduced a 3% additional stamp duty penalty for all second home purchases, including landlords purchasing buy to let properties. This significantly increased the cost of entry into property investment and dissuaded many people from entering the fray.
But not all of the bad news has come from the taxman. The rental sector has seen a significant increase in the amount of regulation directed at landlords. Rogue landlords have been rightly criticized in the media, where they have failed to provide decent and safe accommodation for their tenants. Consequently, the regulatory requirement now imposed on landlords has stepped up significantly, and this has added substantially to the cost of maintaining a rental portfolio.
So, where does this leave existing and prospective landlords today? Is property investment still a good long-term strategy, or has the taxation and regulatory reforms over the past five years made the prospect of property investment unviable for the investor looking to generate long-term capital growth and income?
Interestingly, the government has recently gone out of its way to create some significant property-related opportunities. These opportunities lie not in acquiring buy-to-let properties but in building the new homes that will help the government reach its 300,000-a-year target. They have done this by creating a raft of permitted development rights that allow non-residential buildings to be converted into residential homes without the need for planning permission. The answer, says the government, is to convert the ever-increasing number of brownfield sites that are well-suited to redevelopment as housing instead of building on our highly prized green belt.