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Buy-to-let begins the fight back

Nia Williams

May 20, 2010

The BTL sector was one of the biggest casualties of the credit crisis. At its lowest point (September 2009) 95% of all deals available at the peak of the market (August 2007) were withdrawn.

However, the number of BTL mortgages available has grown 70% since September 2009, increasing from 179 to 304, and encouragingly a number of these deals are at higher LTV levels.

Lenders are reappearing back in the sector and average rates are continuing to fall.

Darren Cook, spokesman for Moneyfacts.co.uk commented: “This is encouraging news for investors, especially those who were locked out of the market as the maximum available LTVs fell.

“Competition has returned to the market, as lenders make cuts to their new borrowing rates.

“Saffron and Melton Mowbray Building Societies have returned to the market during the past month, while new lender Bank of China continues to successfully find its niche. Both are signs that this market is starting to become a more viable and safer option for lenders.

“Predicted changes to capital gain tax (CGT) could put the recovery of the BTL sector off track.

“Government sources predict that CGT on non-business assets, including buy-to-let properties, could rise from 18% to a figure that could be as high as 40%.

“In a separate blow the annual exemption limit for CGT, currently £10,100, may come down to as low as £2,500. This will bring hundreds of thousands more people into the tax net.

“One possible consequence could be an increase in the preferred investor properties on to the market as people scramble to take any current gains.

“The changes could spark a downward price spiral, but could create opportunities for both homebuyers and potential landlords.”


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