In yesterday’s linkage, we published the Telegraph’s take on the disconnect between current buy-to-let lending and looming tax changes that will - in some instances - wipe out profits. Today, Paragon reports profits boosted by 10.2% on the back of a 102% rise in buy-to-let lending, and the Post Office invite themselves to the party with a new range of buy-to-let mortgages. Collective heads in the sand? Yes, according to Moneyweek’s Merryn Somerset Webb, and the no-nonsense headline… “don’t do it”. “Not many people,” she warns, “are brave enough to lose money on an investment in cash terms every month” while they wait for rents to rise on the back of wage rises, or house prices rises to take care of the slack. The other alternative is landlords pulling out of the market, and a scarcity of rental properties at a time when residential mortgages are harder to come by. The result? More competition and rising rents for the cash-riich minority of landlords. It’s hard to see how the tax changes make the situation fairer for anybody.
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