This week’s Star Letter goes to Mark for his comment on the story ‘Buy-to-let market reacts to tax changes in January – Ying Tan’s Market Monitor‘.
The buy-to-let market has taken a big hit, with most investors that I deal with saying that they will not be buying any more properties. Not only due to the tax reduction, but because of the increase in Stamp Duty, which currently makes a buy to let uneconomic. Unless of course we see massive capital growth, which I doubt at the present time. We will see an increase in values later in the year, due to the fact that developers will have to cut back because of a lack of buy-to-let investors, who basically fund a development.
Due the lack of new buy to lets coming on to the market, I have already seen rents going up, so the very thing the government was trying to stop is happening because of its new policies. It always fails me, how the “public school boys” cannot see how their policies will affect a market. The banks have increased their criteria on rent, which sends a signal to landlords to put up rents if [they] want a loan. It can only get worse.
It is okay for tenants to moan about rent levels. It is supply and demand. If all tenants refused to pay the high rents, then they would have to come down, but this will never happen. Especially in the South East and London where salaries are high, which in turn attracts young people to the Capital. [They] do not necessarily want the burden of a mortgage, plus they like the freedom to move without any hassle and having to sell.
The other faux-pas the government has made is extending the Right to Buy. All I see everyday, is ex-public sector property being let at astronomical rents, the owner receives a lovely lump sum, then after two years remortgaged as a buy to let, and then moved a little out of inner-London to the outer postcodes.
I valued one recently in Holloway at £1.2m, they paid £350,000 for it a few years ago. They were proposing to get a buy-to-let mortgage and buy a house outright in the suburbs and still keep the property in Holloway, where price increases are still on the up. As far as I am concerned, social housing is social housing and should never be sold. Why don’t housing associations, who tend to run the council housing, use the property as an asset to borrow money against to build new property? It’s a no-brainer to me. I could go on forever, but I won’t take any more of your time.
