The problem with Buy-to-Let at the moment is that even the property bulls expect only tiny rises in house prices for the next few years. So buying property as an investment really is a long-term game, still who wants to work until they are in their late ’60s? Many property investors see their property portfolio as their pension.
But this week, the Buy-to-Let market has been dealt a double blow.
First the chancellor did his U-turn. When advisors and analysts whooped up the benefits of being able to include a second home or investment property in the Self Invested Personal Pensions (SIPPs), many feared that a new bubble would be created. As some believe the property market is a bubble in waiting anyway, this was the last thing we needed.
Then in his pre budget speech, our Gordon said words to the effect, “I’ll turn if I want to. The man is for turning.” And promptly put a tax on direct property investments included in a SIPP, although they are still free of capital gains tax.
Then yesterday, the Portman Building society dealt the second blow. It’s scrapping Buy to Let mortgages for flats less than a year old.
Portman director Matthew Wyles said, “We have over-lent in some cases. And we don’t want to do more. We are jumping out of this market before there is any chance of the Portman losing money. We would rather be prudential and pull out rather than not getting the risks right.”
It’s not so much that the Portman’s decision is a crushing blow, it is quite a small player, but for Buy To Let investors what this move represents could be most worrying.
Although First Time Buyers have been moving back of late, their total numbers are still well below the levels seen a few years ago. So, with FTP’s effectively out of the equation, the market needs Buy to Let investors, otherwise, where will the beginning of each property chain come from?
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