False dawn in buy-to-let, says Moneyfacts

08 April 2006
In the light of recent industry research suggesting buy-to-let property investment is a booming business, the independent financial guide Business Moneyfacts has suggested this may not always be the case.

New legislation introduced today aimed at raising standards in rented properties may put a stranglehold on landlords' finances and reduce profit margins.

Houses of multiple occupation will be particularly affected by the new regulations, requiring specific licences and compliance with the new set of laws.

"Whilst efforts to improve rented accommodation are welcome," explained Moneyfacts' editor Lee Tillcock, "licence costs of up to £1,250 and possibly substantial modernisation expenses mean additional financial burden for investors."

Mr Tillcock did give potential buy-to-let mortgage holders reason for optimism however: "If anything, all the factors mentioned above could mean a reduction in the number of rental properties available, and subsequently increasing rental yields."

Moneyfacts added that the confusion surrounding A-Day, when investors hoping to transfer funds generated from buy-to-let properties into pension schemes were blocked by the Chancellor, has "left many potential investors' plans in ruins" and is likely to discourage other potential landlords.

To read more about buy-to-let mortgages, click here.

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