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Good news for BTL investors (and maybe bad)

Good news for BTL investors (and maybe bad)

Category: Mortgages

Updated: 19/05/2010
First Published: 19/05/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Buy-to-let (BTL) investors have been given reason to cheer, after it was revealed lenders are beginning to return to the sector and interest rates continue to drop.

Research from Moneyfacts.co.uk shows that the number of buy-to-let mortgage deals available across the market has grown by 70% since September last year, to stand at 304 products.

That a number of these deals are at higher loan to value (LTV) levels is even more encouraging.

The BTL sector was one of the biggest casualties of the credit crisis, but now appears to once more be finding its feet.

"This is encouraging news for investors, especially those who were locked out of the market as the maximum available LTV's fell," said Darren Cook, spokesman for Moneyfacts.co.uk.

"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."

However, concern is growing that predicted changes to capital gains tax (CGT) could put the skids under the BTL recovery before it really takes off.

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

Furthermore, it is believed that the annual exemption limit for CGT, currently £10,100, might be about to be reduced to as low as £2,500.

"This will bring hundreds of thousands more people into the tax net," adds Darren Cook.

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

"The changes may spark a downward price spiral, but could also create opportunities for both homebuyers and potential landlords."

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