LONDON, UK, December 04, 2008
/24-7PressRelease/ -- Young Group, has identified that this year's drop in base rate from 5.5% to 3.0% has boosted income in the buy-to-let sector to the tune of 1 billion*. Investors see their income from property taxed - typically at 40 pence in the pound - so the Treasury's annual take of the revenue could amount to 400 million; that represents 80 million for each and every 0.5% drop in rates.
"November's 1.5% rate cut alone saw investors with tracker mortgages provide an additional
240 million a year to the tax pot"
Neil Young, CEO - Young Group
Neil Young, CEO of property portfolio managers, Young Group points out; "Buy-to-let is a sector that's sometimes unjustly maligned but not only does it fulfil a valuable role in providing quality housing stock, it also makes a significant contribution to the Treasury's tax revenues. The Government should be appreciative that as a result of lower interest rates, well advised investors who have tracker mortgages in place are currently providing an additional 400 million a year boost to their tax receipts."
Neil Young continues; "With an eye on the economy and the potential for base rate cuts, Young Finance - the Group's FSA regulated mortgage company - was advising investors to take tracker mortgages as long as twelve months ago. As a result, we now have a significant proportion of investor clients benefitting from the falling interest rate, typically generating an additional annual positive cashflow of around 8,000 each on their London property investments."
It is widely predicted that the Bank of England's Monetary Policy Committee will announce a further reduction in interest rates on 4 December. Each 0.5% cut in base rate could see Alistair Darling receive an additional 80 million from the buy-to-let sector as a result.
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Notes to Editors:
*The Figures
Young Group, has identified that of the 136 billion of outstanding buy-to-let mortgages, approximately 30% are currently tracker products, which have automatically seen interest rates come down in line with the Bank of England's base rate cuts.
A drop in base rate of 2.5% boosts positive cashflow within the buy-to-let sector to the tune of 1 billion - and that's only taking into account those with tracker mortgages. Lenders are now beginning to pass on the base rate cuts to their standard variable rates, which will boost this figure even further.
Since investors see their income from property taxed - typically at 40 pence in the pound - the Treasury's annual take of the revenue could amount to 400 million as a result of the base rate cuts announced so fat this year; equivalent to 80 million for each and every 0.5% drop in rates.
About Young Group
Young Group specialises in providing Property Portfolio Management services to private investors, identifying the best off-plan opportunities in London on their behalf and managing the entire investment process - from sourcing the property through to financing, furnishing and letting.
Young Group is a wealth manager with a focus on property as an asset class. Young Group owns all the property it sells, and also retains a number of properties for its own portfolio. As the principal in every transaction, Young Group does not realise any profits until completion, giving investors 100% confidence that properties will 'value up' and that financing will be secured.
Young Group has transacted in excess of 1,500 apartments, with a retail value of 630m. The majority of our units are bought by clients for their private portfolios. The Group's lettings division, Young Lettings, has successfully let all investors' apartments within a week of completion.
For each property exchange, Young Group donates 50 to Children with Leukaemia, the UK's leading charity dedicated exclusively to fighting Britain's biggest childhood cancer through pioneering research, new treatment and support of children with Leukaemia and their families, and to Norwood, the Children and Families First charity which provides support to families facing social difficulties.
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