Property investment in 2019 is definitely not something you want to just stumble into.
The last few years have taught us that the “easy days” are over: a tougher tax regime, more laws to abide by, falling prices in some areas, and non-stop media negativity.
That’s bad news for amateurs who just want to brag about their “portfolio” at dinner parties.
But it also clears the decks, which means good news for those of us who are willing to take property investment seriously.
Only, though, if you’re going into 2019 with the right knowledge and attitude. Here’s what you need to know…
There’s a common assumption that property prices grow faster in London and the South East, and you get higher rental returns in the North where prices are cheaper.
For a long time, this was true – but not anymore.
According to research from Savills:
That’s a huge difference.
And in the opposite direction from what a lot of people would expect.
To put it in real numbers, if you bought a £200,000 property in the North West, you can expect it to grow by £34,200 more than a £200,000 property in London would.
Research from Hometrack agrees. They report that the price gap between London and other cities is narrowing, and believe this is set to continue.
What does this mean for you?
If you live in the South East, buying close to home doesn’t look like a good idea – for either income or capital growth. Investing further away feels less comfortable and requires more research, but the research indicates that you’ll be rewarded over the next few years.
Leave, sort-of leave, decide again whether we should leave… whatever ends up happening, nobody other than Theresa May seems to believe that the Brexit process is going well.
Believe it or not, that can be good news for property investors. And the longer it drags on for, the better the news is.
Why? Because uncertainty stops many people from taking action. If they have the choice, they’ll “wait and see” – and postpone their next move until things are clearer.
That means there aren’t as many buyers in the market – so basic supply and demand tells you that sellers can’t ask for such high prices. On top of that, sellers are nervous so you might be able to negotiate a discount.
The longer it takes for things to be resolved, the more sellers will be forced into a situation where they have to sell – which means there will be bargains to be had.
Could you buy, then suffer as the wrong Brexit deal causes prices to fall by 20% or more? Well, yes – it’s possible. But given that sentiment is overwhelmingly negative, it seems likely that most outcomes are “priced in” – making now a good buying opportunity.
Up until a few years ago, buyers barely gave any thought about how to structure their purchases: almost everyone bought property as individuals.
Well, the tax changes in 2015 put an end to that – and buying properties within a Limited Company has rapidly become a mainstream choice.
One of the main obstacles to buying within a Limited Company was the availability of mortgages. But, driven by demand from investors, the mortgage landscape shifted drastically in 2018. Suddenly, companies have hundreds of mortgage products to choose from at very competitive rates.
Does that mean that buying properties within a Limited Company is the right choice for you?
Or that if you own properties already, you should transfer them into a company structure?
Maybe…but not necessarily. As always in property, be very wary of anyone who tells you that a particular choice is definitely right for everyone.
It’s possible that forming a Limited Company (and maybe transferring existing properties in) will save you a huge amount of tax. But – depending on your goals – it could cost you a huge amount instead.
The only certainty is that the numbers involved are big – so it’s critical that you get advice from an expert who can look at your individual situation.
Our own service, Property Hub Tax specialises in property and has helped hundreds of investors with exactly this dilemma.
But whoever you speak to, do make sure you get tax advice before you do any investing in 2019: it could be the most profitable conversation you have all year.
The last few changes have been non-stop when it comes for changes in property investment legislation, and 2019 will be no different.
Last year saw big changes to HMO licensing laws and a new law making it illegal to rent properties that aren’t energy-efficient.
In 2019 charging fees to tenants will be banned, it’s likely that changes will be announced to the rules around electrical checks, and there’s rumoured to be plenty more in the pipeline.
And that’s only nationally. On a local level, ever more councils are bringing in “selective licensing” schemes that mean yet more paperwork and costs for investors.
If you use a letting agent to manage your properties, check that they’re keeping their knowledge up to date: it’s hard for even professionals to keep up with, and you’re ultimately liable for any mistakes they make.
And even if you are totally hands-off, as a property investor you still need to keep your knowledge up-to-date.
If you want to take a deep dive, Property Hub co-founder Rob Dix’s best-selling book How To Be A Landlord has been fully updated for 2019.
No doubt: property investment is a lot more complicated than it was a few years ago. In this article alone, we’ve given you a massive amount to think about.
You’ll also see a lot of negativity about property in the media in 2019.
Don’t let either of these things put you off.
A lot of people will decide it’s too much effort or it’s the wrong time, and that’s good news: it means more opportunities for you.
If you look at the past, you’d always have done better by buying when sentiment was negative. Too much positivity means there’s probably a crash around the corner!
So take action, but take intelligent action.
A great place to start is by enrolling in Property Hub University. We have courses covering:
And lots more… and it’s completely free! Sign up now.