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Agents are backing BTL amid warnings

The Association of Residential Letting Agents claims that the boom in buy-to-let is sustainable.

But accountancy firm Blick Rothenburg is warning that the bottom is dropping out of the BTL market and many buyers risk getting their fingers burnt.

Based on figures from Birmingham Midshires, GMACRFC, NatWest, Paragon and Standard Life Bank, Arla says buy-to-let lending is sensible and sustainable and that the amount borrowed by the typical investor has not risen significantly despite house prices.

Arla&#39s figures show that the average buy-to-let loan in the six months to March was £80,200 compared with £80,240 for most of 2000 and 2001 and between £67,000 and £69,400 in 1999.

Of the total buy-to-let lending between October last year and March, 52 per cent was to fund investment outside London and the South-east where rental yields are increasing.

Arla says borrowers are being sensible, with 55 per cent opting for fixed-rate mortgages compared with 16 per cent choosing discounts. Other rates such as Libor and baserate linked mortgages accounted for 22 per cent while standard variable rates made up 7 per cent of the total.

But Blick Rothenberg claims the bottom is dropping out of the market.

It refers to a host of expenses which are incurred as a matter of course by landlords but are not allowable as a charge against income tax liabilities on letting income.

Director David Rothenberg says: “Legal costs and stamp duty on the purchase of the property are not eligible as a charge against income tax. Refurbishment of premises before letting is similarly not allowed as a charge.”

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