Homeowners in the UK are reducing costs, adapting to new rules

Private sector residential property in the UK is engaged in a shake-up of their portfolios. Some homeowners have strengthened their positions by adding new objects to the imposition of increased Stamp duty. Other investors, especially in London, on the contrary, transferred their assets to other financial instruments, considering that the pressures on the sector of elite real estate of London, will be exorbitant, and the ability to derive an income – is negligible.

In addition to the increase of 3% in Stamp duty, the government deprives the owners of property in the UK tax benefits, which they enjoyed while receiving rental income. The latest survey conducted by mortgage lender Paragon Mortgages shows that only 9% of surveyed investors intend to buy property in the UK in the next three months, this figure decreased from 14% last quarter. In inverse proportion increased the number of surveyed investors that understand the introduced modifications. As follows from the same survey, approximately 76% of the respondents said they understand what consequences will changes in the legislation, 14% more than in the 4th quarter of 2015.

Trying to save in the new environment, many landlords-homeowners abandon the current repair of their property. The number of landlords who are willing to repair their property decreased from 25% to 12% for the quarter.

Thus, the volume of existing portfolios decreases, but the remaining investors are trying to strengthen their market positions and increase efficiency of operation.

These data indicate that the market has already started to shrink, in response to the enforced changes that will gradually lead to an increase in rent.

® Alice Morgan. 28.04.2016 G.

 Apartment in the heart of London – Westminster

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