Buy-to-Let to Experience New CGT Rate

On April 6, 2008, the buy-to-let sector is about to get a new rate for singles for the Capital Gains Tax. The drop to 18 percent is expected to benefit many investors including trustees, personal representatives, and others. It is hoped that this new rate will bring back the profitable nature of owning rental property as well as an increase in new entries onto the buy-to-let market sector. The current rate is considered exceedingly high, especially for higher rate tax payers and is viewed as being cost prohibitive. Property owners who wait until after this new rate goes into effect stand to save quite a bit.

In light of this new tax savings, new investors could be drawn to the buy-to-let sector, especially if they have quite a sum of money to invest in their portfolio. In a positive domino effect, the new tax rate could encourage the sale of homes, thereby shoring up the housing market and creating a stabilising effect.

At the same time that the new rate for the Capital Gains Tax is incorporated, the indexation rule will also undergo a change. This inflation adjustment to the purchase price of the home as well as to the enhancements and the cost of such enhancements made to the home could influence the overall taxable gain. Nonetheless, new investors should take caution and consult an advisor on the merits of getting into the buy-to-let market at this current time.

Buy-to-Let Lender Natwest to Incorporate Changes to Its Deals

Natwest, a buy-to-let lender affiliated with RBS Intermediary Partners, is incorporating a few changes to their buy-to-let products. Effective immediately, all of their following rates will undergo a slight increase in percentage: 2 year fixed rate online only, 2 year tracker, lifetime tracker, and lifetime tracker remortgage. Essentially, the rates will experience a 21 to 25 percent increase that keeps them within a 1 to 1.14 percent range of the base rate.

The minimum loan on all of these mortgage products remains at £15k while the maximum LTC (loan to value) is set at 85 percent. The 2 year fixed rate online only will increase from 5.44 % to 5.64 % with a set arrangement fee of £2,500. The 2 year fixed rate online only with a set arrangement fee of £1,900 will increase from 5.64 % to 5.84 %.

The 2 year tracker will increase from 6.04 % to 6.25 % with a set arrangement fee of £999. The 2 year tracker remortgage with a set arrangement fee of £999 will increase from 6.14 % to 6.39 %.

The lifetime tracker will increase from 6.20 % to 6.45 % with a set arrangement fee of £999. Another lifetime tracker will increase from 6.30 % to 6.55 % with a set arrangement fee of £999. While the lifetime tracker remortgage will also increase from 6.30% to 6.55 % with a set arrangement fee of £999.