Buy-to-let landlords urged to sell now

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by Kay Murchie

Experts are warning that small-time property investors with around 20 – 30 investment properties face ruin unless they sell up immediately.

It is anticipated that the UK property market will crash by at least 25% meaning that buy-to-let landlords will risk losing a minimum of 30-40% off the price of their investments over the next 18 months.

The turmoil in the credit markets is a huge problem for the UK with the problem worsening for buy-to-let investors as recent changes in capital gains tax laws could tip the balance of a stream of properties onto the already waning UK housing market.

The rate of capital gains has been cut from 40% to 18% and the new rule, which comes into effect in April 2008, means that in a thriving market, the lower 18% payment would encourage landlords to sell more freely instead of waiting for 3 years as is the case now, in order to avoid paying the tax.

However in a falling market, hundreds of buy-to-let properties will flood the market as landlords bail out. Experts are so certain that the UK property market is headed for a crash that they are anticipating a 40% correction in the market over the next 18 months.

Howard Pinto, property specialist at City Homes London, said the sub-prime mortgage problems in the US are a scary situation for global economy. He added The fact that the US is facing losses of over 55% and falling is a sign of what is about to occur here.

During October, property prices fell at their fastest pace for over 2 years as prospective buyers are in ‘wait and see’ mode. The cost of property in the UK fell for the third consecutive month in October, the fastest rate since July 2005, according to The Royal Institution of Chartered Surveyors.

Furthermore, the percentage of people looking to purchase a property fell for the 11th month in a row as a mixture of the tightening of lending criteria from mortgage lenders and higher interest rates hit demand.