Britain’s army of buy-to-let enthusiasts could be hit hardest by this Thursday’s surprise increase in interest rates as the dangerous gap between rents and borrowing costs widens even further.
The slow rise in rents as prices have risen in the past decade means the yield on the typical home has fallen to record lows and to the point where most new entrants, unless they put down a huge deposit.are losing money every month.
Given that investors account for more than half the flat sales in most new developments a drop in buy-to-let enthusiasm is likely to hit housebuilders.
References: Financial Times page 3 13/01/07
