Landlord dash to beat Stamp Duty pushes lending through the roof
What’s the latest?
Mortgage lending in March was up 59% on the same month last year as landlords made a final dash to beat the Stamp Duty hike.
A whopping £25.7bn was advanced to all borrowers during the month – 43% more than in February and the highest figure for March since 2007, according to the Council of Mortgage Lenders (CML).
Property transactions for March also spiked to 161,900, according to HM Revenue & Customs. The figure, which was up from just 92,690 in February, represented the highest turnover in the property market since August 2007.
Why is this happening?
With the Government’s decision to introduce a 3% Stamp Duty rate for people buying a second property set to cost landlords £7,500 in extra tax on a £250,000 purchase, it is not difficult to understand why people have rushed to beat the deadline.
CML economist Mohammad Jamei said: “The distortion caused by this Stamp Duty change appears to be larger than any previous Stamp Duty change we’ve seen.”
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Who does it affect?
The surge in transactions is likely to be good news for people looking to rent, as they are likely to have more choice than previously. The potential glut of properties coming on to the market may even put downward pressure on rents.
Sounds interesting. What’s the background?
Many commentators believe landlords simply brought forward purchases to beat the new 3% Stamp Duty and there will now be a lag in activity.
“The housing market over the next few months should be less frenetic but more competitively priced..."
In fact, the CML predicts there will be 10,000 fewer mortgaged transactions each month in the second quarter than would otherwise have been the case, offsetting the surge in activity seen in March.
And anecdotal evidence suggests estate agents have already seen a fall in demand, while the uncertainty caused by the referendum on whether the UK will leave the EU is also expected to act as a dampener on the market.
But with the economy improving and interest rates remaining low, activity is expected to pick up again in the second half of the year.
Jeremy Leaf, former chairman of the Royal Institution of Chartered Surveyors (RICS), said: “Encouragingly, on the ground we are seeing that supply is improving a little.
“The housing market over the next few months should be less frenetic but more competitively priced, offering opportunities for first-time buyers and those moving up the ladder.”
Top 3 takeaways
- Mortgage lending in March was up 59% on the same month in 2015 as investment landlords made a final dash to beat the Stamp Duty hike.
- A total of £25.7bn was advanced to all borrowers during the month - the highest figure for March since 2007.
- A total of 161,900 properties changed hands in March - the highest level since August 2007, according to HMRC.
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Did you secure a mortgage on a second property before the new Stamp Duty kicked in? Tell us by posting a comment below...
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