While the UK housing market in general still seems a little shaky at the moment, there is a little corner that is quickly regaining its former confidence. Despite the fears over a possible Capital Gains Tax (CGT) increase, the mortgage market for buy-to-let investors is more buoyant than for several years. 

Two new buy-to-let lenders have entered the market over the past month alone and the number of buy-to-let mortgage products has grown by a huge 70% since 2009, admittedly from a very low level in the midst of the credit-crunch. 

As well as the growth in the number of products available, the loan-to-values of existing products are beginning to favour investors, with some requiring only a 20% deposit.Coventry Building Society is currently offering a fixed-rate mortgage at 4.59% until the end of 2012 with 40% deposit.  

However, the potential growth of the buy-to-let market is being offset by uncertainty of the CGT increase. Analysts believe that many landlords will simply hold onto the properties for longer and continue drawing rental income rather than selling them and becoming liable to higher rates of tax. 

While the buy-to-let market splutters back to life the rest of the UK market is dealing with problems of its own. The latest figures from the Land Registry show that house prices in April rose by another 0.2%, pushing up the annual rate of increase to 8.5%. This was the fastest rate of growth since September 2007.

At the same time, new mortgage borrowers with Lloyds TSB and Cheltenham & Gloucester must pay a much higher standard variable rate when their initial deal expires. Current borrowers revert to a standard variable rate (SVR) of just 2% above bank rate, so currently paying 2.5%.  

However from 1 June, new borrowers, or current ones who switch deals, will have to revert to an SVR without any ceiling, currently set at 3.99% although the decision does not affect borrowers with Halifax and Bank of Scotland.  

This means that while buy-to-let investors are starting to find their feet after the recession, first time buyers will be finding ever more difficult to set foot on the property ladder. One of the main tasks facing the new government will be to ensure that the most vulnerable stakeholders of the property market are protected.

This entry was posted on Wednesday, June 2nd, 2010 at 5:22 pm and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.