Why 2023 could be a good time to invest in buy-to-let

With many landlords’ profits taking a hit as a result of legislative and tax changes, investors into the sector have significantly decreased over the past few years. However, many industry insiders believe that now is a good time to put your money into buy-to-let property, whether for the first time or to expand an existing portfolio and here’s why…

Rental demand is high
Over the past few years there has simply not been enough accommodation to meet the demand from tenants, which has resulted in rents rising, meaning that rental returns remain strong, especially in high yield areas. In addition, with the private rental sector now making up 20 per cent of housing stock in the England – a figure that rises substantially in cities, especially London – the buy-to-let sector helps enable tenants to secure a decent home.

A slowing market presents opportunities
It’s easy for prospective investors to get spooked when price growth slows, and a ‘crash’ is mooted. However, from a buy-to-let purchaser’s perspective, there are bargains to be had, with many motivated vendors willing to take less to achieve a speedy sale. It’s also worth remembering, that while not guaranteed, capital returns look set to be good in the long-term, albeit not at the same level of growth experienced in the previous two years.

Purchasing as a limited company is more tax efficient
If you’re thinking of becoming a landlord in 2023, you might want to consider purchasing your buy-to-let through a limited company, as this will be more tax efficient, especially if you’re in the higher tax bracket. Mortgage interest payments are tax deductible for companies and you’ll also pay the lower corporation tax – which currently sits at 19 per cent. However, this looks set to rise in April for companies with profits over £50,000. Another benefit of this is that you can supplement any salary received from the company (on which you pay income tax) with dividends, which have lower tax rates.

You are not the enemy
Despite what certain sections of the media may claim, becoming or being a buy-to-let landlord does not make you a persona non grata. Stories of money-grubbing, negligent landlords are rife, but a recent survey paints a very different picture, with the majority of tenants in the private sector in England and Wales rating their landlords highly.
In summery, although recent changes mean that you might earn less that you would have done in previous years, buy-to-let remains a profitable investment. If you would like expert advice on suitable buy-to-let properties in the west Essex and east London areas, what rental income you can expect and ways to increase yield, then please get in touch.