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| CURRENT SECTION :: Money News | UK's most visited IT Contractor Site - 250k unique visitors March 2008 |
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The fall in capital gains tax for buy-to-let landlords has failed to prove a big enough incentive for them to part with their investments. Contrary to expert fears, landlords have resisted flooding the market with their properties after the tax take of selling them reduced from (up to) 40% to 18%. In fact, only 2 per cent of landlords say the tax change will mean they will sell when their current tenancies expire, says a survey of 500 residential letting agents by RICS. Obtained by the Financial Times, the findings are seen as evidence that landlords currently see higher value rentals as more appealing than the lower tax rate of selling. Last month RICS testified to the attractive monthly yields: it said gross yields – rent as a percentage of a property’s value - increased at its fastest pace since 2005. Simon Rubinsohn, its chief economist, yesterday hinted that rising incomes from rentals, which are increasingly longer, explained why experts had been wrong-footed. “The incentive to cash in on the lower tax rate is being outweighed by attractive yields,” he said. “Significantly, with the reduction in loan to value ratios by lenders leaving first-time buyers struggling to access the housing market, rents are now rising sharply and the expectation is that this trend will continue.” In addition, gloomy headlines about house prices decreasing may have convinced landlords that now might not be the best time to sell their properties. Moreover, they may seem themselves as a rarer breed: new entrants into the buy-to-let market are significantly down, thanks to the reduction or withdrawal of associated mortgages, coupled with much tougher criteria from lenders. According to RICS, a reported 4.6 percent of landlords in total were planning to sell their properties in the fourth quarter this year, down from 6.5 percent in the fourth quarter of 2007. Apr 25, 2008 Email this article Printer friendly page Previous Page
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