Stamp duty on second properties is due to increase in April following a Treasury consultation earlier this year and as a result the buy-to-let market has seen a busy start to 2016.
From the beginning of April, most owners in England and Wales will pay a 3% surcharge on stamp duty on purchases of buy-to-let properties and second homes. The move is designed to free up more housing for people trying to buy their first home, who may be struggling due to rising prices and lack of housing supply. Though targeted at landlords and those buying second properties for themselves, the changes will affect anyone buying a second home. This will include parents trying to help their children get on the housing ladder by buying them a house or flat.
The exact policy is due to be outlined in the 2016 Budget in March and landlords appear to be keen to push through any purchases prior to the changes taking affect. The British Bankers’ Association said that the number of mortgage applications approved for house purchases was 27% higher than the same period in 2015. Providing similar data, the Council of Mortgage Lenders reported an eight-year high in mortgage borrowing.
The new charges are expected to raise an extra £1 billion in revenue for the Treasury over the next 15 years, however there are concerns that it will not achieve its’ objective of opening up the housing market. Landlords may simply pass on the charges to tenants through increased rents.
There is still time to get ahead of the changes and to capitalise on this latest upward surge in prices in the market so please contact us to find out how we can sell your home from as little as £499 or 0.5% + VAT.
The buy-to-let market continues to grow with lending in this sector up 40% since 2008, according to the Bank of England’s Financial Stability Committee (FPC). Over the same period, owner occupier mortgage lending has risen just 2%.
In a recent statement the FPC expressed concerns that the growing buy-to-let property market in the UK could post a threat to wider financial stability, having the potential to “amplify” a housing boom and bust.
“The FPC is alert to the rapid growth of the market and potential developments in underwriting standards,” the committee said. “As the market continues to grow, particularly if driven by loosening of underwriting standards, the sector could pose risks to broader financial stability, both through credit risk to banks and the amplification of movements in the housing market.”
The Bank said that buy-to-let landlords were more likely to sell if there was a significant drop in house prices, accelerating the dive in property values further. A similar amplified effect could occur should prices go up sharply. “Any increase in buy-to-let activity in an upswing could add further pressure to house prices. This could prompt owner-occupier buyers to take on even larger loans, thereby increasing overall risks to financial stability,” the FPC said.
So it appears that the buy-to-let boom is far from over yet but there are risks of sharp increases or decreases ahead. If you have any concerns about your buy-to-let portfolio and want any advice about capitalising on existing high prices to release equity from some of your properties then please contact us on 01252 819725 or email us at firstname.lastname@example.org. We can sell your property from as little as 0.5% or £499+VAT, putting more of your equity in your pocket.