Property investment ‘more profitable’ than in 2016, say economists

Despite a raft of tax and regulatory measures designed to restrict the growth of the buy-to-let sector, property investment is nevertheless more profitable now than it was two years ago, according to prominent economists.

It could be easy to assume that property investment would be a less enticing prospect with a three per cent Stamp Duty Land Tax (SDLT) surcharge on additional properties, restrictions on mortgage interest relief and tougher affordability tests for buy-to-let investors. However, low-interest rates seem to have largely cancelled out this effect.

Samual Tombs, chief UK economist at Pantheon Macroeconomics, said: “A buy-to-let investor refinancing a two-year fixed mortgage that they obtained in May 2016 will save £1,400 per year in interest payments, assuming that they have purchased a property of average value.

“After the tax reforms and the fall in mortgage rates, virtually all buy-to-let investors are better off.

“We do not expect the market to be hit suddenly by a wave of fire-sales by landlords this year.

That could change as and when mortgage rates jump.