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The global credit squeeze has failed to hurt the UK’s buy-to-let sector, where almost half of landlords plan to invest more money in the market in the coming months. Nine out of ten 10 landlords have no intention of selling their properties, according to a fourth quarter survey by the Association of Residential Letting Agents And despite the onset of the credit crisis, the survey reveals the average life expectancy of a buy-to-let investment in the UK has remained “fairly constant” for the past three years. “This is good news for the whole of the private rented sector and for the housing market, particularly as it comes from surveys carried out well after the credit crunch had began to bite,” said Ian Potter, ARLA’s head of operations. The survey, which found 40 per cent of landlords will make further purchases this year, is the first evidence that the higher cost of financing has not brought the buy-to-let market to a halt. But the findings, based on feedback from almost 250 landlords and 517 lettings offices, reveal that investors borrowed an average of 70 per cent of the purchase price, down from 74 per cent in the previous quarter. They also show that the average value of rented houses fell by 1.3 per cent over the quarter, with a drop of 5.2 per cent in the south east and 4.5 per cent in the rest of the UK. A survey by Nationwide, published last week, found annual house price growth slowed across the whole of the UK in the final quarter, bringing average growth down from 9.3 to 6.9 per cent. Meanwhile, ARLA’s survey was carried out too early to judge any possible effect on the proposed changes in capital gains tax from April. If tax relief on mortgage interest for residential investment be disallowed, almost four out of ten landlords would not be influenced, but a further quarter would sell all or some of their investments. “Any alteration in the reliefs could seriously damage the private rented sector,” Mr Potter said. “It is only with the help of the refinancing by buy-to-let investors that the sector has become properly viable again although, even now, we are still experiencing a severe shortage of property.” Jan 10, 2008 Email this article Printer friendly page Previous Page
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