Speaking at Fitch Ratings’ Non-Conforming Residential Mortgage-Backed Securities conference, Gregg Kohansky, senior director of Fitch Ratings, believed that while the BTL market had remained resilient in the face of the global credit squeeze, there were still issues facing the market in 2008.
Among the key concerns, Kohansky said, were changes to CGT which, he explained, could see the market drop off in some areas.
He said: “The concentration of BTL properties in some regions is over 20 per cent and while the market has remained strong, with arrears similar or lower to prime mortgages, we are still worried that because the sector has not experienced a downturn before, there is the risk of defaults rising.
"Also, with changes to the CGT law, you could see more landlords selling off their BTL properties to maximise profits and protect capital appreciation.
"If this was to happen in an area with a high concentration of BTL properties, it could have a negative impact on the wider market.”
Fitch admitted that London could be impacted most because it had the highest regional proportion of BTL properties, at 20.4 per cent, although it would be protected by having lower loan-to-values.
However, Andy McQueen, managing director of Nationwide Specialist Lending, believed the CGT changes would be beneficial for the market.
“The CGT changes were generally good news for landlords. They will be paying a flat level of tax, which simplifies things, and the requirement to hold onto properties for a length of time has been removed.”
