Buy-to-lets surge on capital gains tax news

Investors are piling back into buy-to-let, with brokers reporting a surge in enquiries from wealthy individuals relieved that the capital gains tax increase was not as painful as feared.

Potential investors had put plans on hold over concerns that CGT could soar to 50 per cent in the coalition government’s emergency Budget. But after the tax rose to a lower-than-expected 28 per cent last week, brokers are again experiencing high levels of demand.

“The bogeyman has gone away and the argument for investing in property remains strong,” said David Whittaker, managing director of Mortgages for Business. “Confidence is returning and we’ve certainly seen a pick up in interest from potential buyers.”

The Mortgage Works, a buy-to-let specialist, said it was “extremely busy” with new enquiries.

This week also saw the launch of new buy-to-let products from new lender Precise Mortgages; a 4.99 per cent lifetime tracker and a two-year tracker at 4.95 per cent.

The buy-to-let market has been badly hit in recent years, with the number of products plummeting from 3,662 in September 2007 to just 266 last week. But the sector is showing strong signs of a recovery with the number of buy-to-let loans rising by 50 per cent since September last year, according to Moneyfacts.co.uk.

Melanie Bien, director of mortgage broker Private Finance, said: “The buy-to-let market was one of the biggest casualties of the credit crunch, with lenders pulling out of the market en masse, raising rates and fees, and tightening criteria. But it has received a boost in recent weeks with welcome signs that lending conditions are finally starting to improve.” Estate agents have also reported an increase in demand for high-end rental properties from corporate tenants in London. Cluttons recorded a 35 per cent rise in UK corporate lets this summer and said the rise in overseas employees coming to the capital post-recession would be a major boost to the sector.