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Concerns aired over buy-to-let competition
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
With buy-to-let investors rushing to purchase property ahead of the stamp duty changes a little more than a month away, fresh concerns have been aired about the future of the market.
Mortgage approvals hit their highest ever level during January. The British Bankers’ Association revealed that its members approved 27% more loans last month than at the same period last year.
However, additional data from HM Revenue and Customs suggests the number of property sales didn’t keep pace, with a slide in transactions over the previous month.
Stamp Duty Changes
Following Chancellor George Osborne’s announcement of a 3% rise in Stamp Duty Land Tax for buy-to-let investors in the Autumn Statement, buyers have been flocking into the sector.
Ajay Jagota, founder and MD of sales and lettings firm KIS, noted, ‘the start of 2016 has seen a significant rise in mortgage borrowing and it seems perfectly reasonable to attribute that to property investors trying to get in ahead of April’s tax changes.’[1]
‘These changes are not insignificant and will undeniably drive up purchase costs and are also being introduced at the same time as the scrapping of the wear and tear allowance which allows landlords to claim tax relief for keeping their properties in good condition,’ he continued.[1]
Concerns aired over buy-to-let competition
Bottleneck
Mr Jagota observed that, ‘anecdotally the industry is full of stories of a substantial number of homes stalled in the pre-completion stage and even a shortage of solicitors available to carrying out conveyancing.’ He went on to say that, ‘it’s clear we’re seeing something of a competition bottleneck. The real questions are whether or not buyers will persevere with the sales if their transactions are not completed when the tax changes come in. Will they take the hit, or will we see a spate of sales simply abandoned?’[1]
‘It’s more than likely that we will see demand from investors drop off after April, but this is unlikely to have a significant impact on the wider property market as residential buyers, particularly if first time buyers return to centre stage,’ he concluded.[1]
[1] http://www.propertyreporter.co.uk/landlords/btl-investors-warned-of-completion-bottleneck.html
