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Tax hike may stifle B2L recovery

The planned increase in Capital Gains Tax could endanger the growth of the buy-to-let sector which is beginning to show heartening signs of strength, says Sally Laker, managing director of Mortgage Intelligence Holdings

Now, in many areas rents are almost back at their 2007 peak. In April, the average rent in the UK rose by 0.6% to £663 per month – 2.2% higher than a year ago.

In London, where house prices have risen by 13% in the past year according to the Land Registry, prospects are particularly promising, with an average annual return of 18.8%, or £39,090. This compares with 5.1%, or £6,875, in the North-East.

Importantly, lenders are looking favourably on the sector once more.
In the recession buy-to-let mortgages suffered more than most as lenders tightened their criteria significantly, demanding 35% deposits instead of the usual 15%.

Many landlords who wished to take advantage of lower property prices had their hands tied and, according to the Council of Mortgage Lenders, only 93,500 buy-to-let mortgages were arranged in 2009 – a quarter of the number seen in 2007.

So despite the possible increase in CGT the buy-to-let market is looking hot to trot again and the longer term future looks bright.

As more lenders get back into the market with attractive deals investors old and new are likely to be tempted to jump in.

Of course, this spells good news for mortgage brokers as the sector bursts into life again and demand increases.

Let’s just hope the potential CGT increase doesn’t put a spanner in the works of buy-to-let at this sensitive time, and that the coalition government doesn’t have any more unpleasant surprises in store.

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60 Seconds with…

Paul HowardHead of Corporate AccountsNationwide Building Society With first-time buyers finding it hard to get on the housing ladder, what impact will this have on the buy-to-let market?It’s putting more demand on the private rental sector and we are seeing lenders make their products more attractive in response. The Mortgage Works recently introduced 80% LTV […]

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New CGT threatens housing recovery

Government Capital Gains Tax proposals could force a quarter of property investors from the housing market, according to a survey by LSL Property Services plc, owner of the UK’s largest lettings agent network.

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  • John Stephenson 3rd June 2010 at 12:26 pm

    Lets hope that capital gains tax causes the housing market to CRASH. I earn just above an average salary and still cannot afford a home. You are people blind? Why the hell do you people think rise after rise is good for the greater good? If people have eye watering mortage/rent and have less money in their back pocket to spend on goods/services then the economy will collapse. THINK ABOUT IT YOU GREEDY LOT.

  • John Stephenson 3rd June 2010 at 12:26 pm

    Lets hope that capital gains tax causes the housing market to CRASH. I earn just above an average salary and still cannot afford a home. You are people blind? Why the hell do you people think rise after rise is good for the greater good? If people have eye watering mortage/rent and have less money in their back pocket to spend on goods/services then the economy will collapse. THINK ABOUT IT YOU GREEDY LOT.