Fresh fears of housing price crash as buy-to-let purchases PLUNGE
04-14-2016
PROSPECTIVE buy-to-let owners have fallen by more than a quarter amid a punishing new tax on landlord buyers, fuelling fears of a price crash in parts of the country.
Sales interest from property investors plunged by 27 per cent in March from the same month last year, showed data from Rightmove.
The new tax was introduced to make it longer and more it difficult for investors to secure a profit on buy-to-let.
More tax measure to reduce landlords profits are to be brought in next year.
This appears to have put buyers off investing in property to rent, with a slowdown in investor spurchases, according to the property listing site.
It comes after a marked jump in interest seen from investors between December and February, up 24 per cent year-on-year, as they tried to make last minute purchases before April's deadline.
Sam Mitchell, Rightmove’s head of lettings, said: “This waning of interest definitely seems to predict a slowdown in the buy-to-let market, but what’s not yet clear is if this will only turn out to be a short-term pause.
"It could be that some investors are waiting until the tax changes have some time to bed in before they review their business and continue to make purchases."
The drop in investor interest already appears to be feeding through to house prices in parts of London.
Asking prices in some of the most exclusive areas have dropped by more than 10 per cent this year, it was recently revealed.
Some critics have predicted new build flat prices could plunge by as much as 20 per cent this year.
Investors looking for the best yields have now been advised to look at counties like Durham and Merseyside, with Peterlee set to offer the best rental yield over the next year of 9.1 per cent, followed by Bootle 8.6 per cent, according to Rightmove.
Mr Mitchell added: "These areas where you can buy a two bed property for around £60-70k seem to offer a sound investment as long as the demand is there from tenants, so it’s worth speaking to local agents about what the rental market is like."Whilst the highest demand for rental properties is often in the South and the East of England, this quarter’s data shows demand is growing in Manchester in places like Ashton-
Under-Lyne and Stalybridge so they’re worth considering this year as well.”
Rent increases for the first three months of the year were highest in Greater London, with landlords raising prices by 1.3 per cent, found Rightmove.
This was followed by 1.1 per cent in the North West.
In the South East and East of England rents fell by 0.1 per cent over the quarter.