Buy-to-let stamp duty

Buy-to-let mortgage financing skyrockets prior to the stamp duty rise

In January, various buy-to-let mortgages skyrocketed by 22%, when compared with precisely the same month in 2015, as landlords had to rush to beat the changes in the forthcoming taxes.

According to the Council of Mortgage Lenders (CML), buy-to-let borrowers took out approximately 9,500 loans in January, as compared with 7,800 in January 2015. The entire sum borrowed increased by 40% year-on-year to GBP1.4bn.

These numbers are the latest to reveal a surge in interest from investors prior to the forthcoming stamp duty increase on second homes. They will start paying a 3% surcharge on stamp duty on any property purchased from April 1.

The Council of Mortgage Lenders said that the sum given to homeowners remortgaging was GBP5.8bn, and this is the highest amount since January 2009 and an increase of 32% on the same month in 2015.

According to Jeremy Leaf, a former Rics chairman and north London estate agent, “The figures give us a flavor of what’s to come in the home market over forthcoming months.

“What we’re seeing right now is individuals taking advantage of mortgage rates while they may be low. With a comparatively low variety of trades taking place, lenders are having to make up their numbers somewhere and are offering a plethora of attractive remortgage deals.”

In January, individuals buying a home for the first-time took out 21,400 home loans, almost up 14% in January of the previous year, making for a loan-out of a total of GBP3.3bn.

According to Mark Harris, the chief executive of mortgage broker SPF Private Customers, ” Cheap mortgage rates, challenger banks keen to lend and schemes aimed at helping first-time buyers on to the ladder, are all helping create a buoyant market, which we expect to continue well into the spring..”

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The Royal Institution of Chartered Surveyors (Rics) stipulated that its members considered that the UK housing marketplace will slow down during the following three months as the stamp duty tax changes peters down.

More still, according to Simon Rubinsohn, Rics chief economist, “Over the past three months, we have witnessed a surge in buy-to-let activity.”

“Investors have hurried to buy houses before the stamp duty surcharge comes into effect. It’s inescapable that over the forthcoming months, the stamp duty changes of April will take a little of the heat out of the investor marketplace”.

“While there remain significant doubts as to whether the government’s plans to encourage a more robust development and construction pipeline will be sufficient to address the housing crisis, long-term price indications for the housing market remain strong.”

The director general of the Council of Mortgage Lenders, Paul Smee posited that borrowers “continue to seek attractive deals despite the lower-for-longer expectations for interest rates”.