Buy-to-let
Generous parents represent nearly a quarter of those planning to invest
Parents eager to give their children a foothold on the property ladder are among the biggest factors fuelling the buy-to-let boom, according to latest research.
Generous parents represent nearly a quarter of those planning to invest in buy-to-lets over the next six months, encouraged by strong property prices and annual government tax relief of around £2bn for property investors.
According to the report from building society group Birmingham Midshires, 31 per cent of over-55s said they were intending to try their hand at property development.
In spite of this surge of interest, some finance experts have warned that a raft of new legislation was making it more difficult for first-time investors.
Stringent fire and safety rules, mandatory licenses for houses in multiple occupancy and a new scheme to place deposits with a third party are pushing up the cost of being a private landlord.
According to financial analysts, Moneyfacts, the buy-to-let sector has only been established as an industry for 10 years and in recent months there has been an increasing drive to impose greater regulation.
Under the new deposit protection scheme, tenants pay their deposit to an independent third party who decides if it should be returned to them when they leave. Designed to stop unscrupulous landlords hanging on to deposits without good reason, the scheme nevertheless demands that landlords pay a fee for the service.
The government has come under pressure recently to scrap tax relief for landlords amid growing concern that first-time buyers are being frozen out of the property market.
Recent research by The Guardian showed buy-to-let investors enjoyed tax relief worth £2bn in 2006, while first-time buyers qualified for none.
As recently as 2000, tax relief for landlords stood at just £200m a year, but hectic growth is likely to push it up to £3bn by 2008, eclipsing even the amount spent by the government on social housing.
Your property may be repossessed if you do not keep up repayments on your mortgage.
For mortgage advice you can choose how we are paid: pay a fee, usually 0.5% of the loan amount, or we can accept commission from the lender.
Levels and bases of, and reliefs from, taxation are subject to change.
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