Buy-to-let investments have been a lucrative choice for many investors. Rod Thomas goes into detail of how buy-to-let investments are changing for the future.

1. Why Investors
Should Be Wary of
Buy-to-Let
Investments
RODTHOMASINVESTMENT.CO.UK

2. Buy-to-let investments have been a lucrative
choice for many investors. With landlords or
property managers overseeing day-to-day
operations, BTL represented a hands-off
investment.
Furthermore, rents collected from tenants
allowed investors to safely earn regular, passive
income, and low costs thanks to historically low
interest and rates kept returns stellar.
New rules on both landlords and investors,
economic woes, shifting political winds, and
other factors have undermined the strength of
this once-prized investment vehicle.

3. Today, only 75 percent of mortgage interest
costs are tax deductible, which takes a significant
bite out of landlords and investors’ earnings.
The size of mortgage interest deductions will
shrink from 75 to 50 percent during the 2018-
2019 tax year and all the way down to 25 percent
in 2019-2020; by 2021, financing costs taken on by
landlords will only be entitled to a basic tax
deduction.
This growing tax burden on landlords spells
trouble for BTL investments.
TAX CHANGES

4. For years, interest rates in the UK have cruised at historic lows. For landlords, this trend has meant that
the cost of mortgages has also been historically low—as I reported in a previous article—so landlords and
investors have been able to enjoy higher earnings as a result. That may change when the Bank of
England meets in November, as they are widely expected to increase interest rates for the first time in 10
years. Borrowing costs will therefore increase for landlords, and coupled with their greater tax bills, the
appeal and the profits of BTL investment will plummet.
INTEREST RATES

5. HEIGHTENED
REGULATION
As of 30 September, new rules took effect that applied to
landlords with four or more mortgaged properties. If
landlords in this category apply for a new mortgage, the loan
will seek to evaluate the affordability of the applicant’s
entire portfolio, not just the property in question. This
regulation will make it more of a challenge for landlords to
grow their portfolios and for investors to grow their returns.

6. At Avantis Wealth, we’ve heard stories from our clients who
were unsure how to make their money work for them in
uncertain times such as these. That’s why we developed the
F.R.E.S.H. Investment Strategy, which, among other things,
offers fixed income, a hands-off approach, and typical returns in
the realm of 7-15 percent annually.

7. LEARN MORE AT
RodThomasInvestment.co.uk