Buy-to-let lending booms as landlords beat stamp duty hike

Wednesday, February 17, 2016. Ivan Radford @themovechannel

Buy-to-let lending has surged at the start of 2016, as landlords race to beat the stamp duty hike set to come into effect in April.

Today’s other Mortgage Desk news:
First-time buyer lending hits highest since 2007

Buy-to-let lending has surged at the start of 2016, as landlords race to beat the stamp duty hike set to come into effect in April.

The latest figures from e.surv highlight the buy-to-let boom, which has taken home lending to its highest peak in nine years.

January saw 85,432 house purchase approvals – up 20.6 per cent month-on-month from 70,837 in December 2015. The substantial monthly rise was fuelled primarily by investors looking to beat the upcoming legislative changes, which will see a surcharge of 3 per cent added to the stamp duty for any second home purchase, including those for buy-to-let purposes.

It meant January saw the highest number of monthly house purchase approvals since 87,594 in October 2007, nearly nine years ago.

The figures follow a drop in buy-to-let lending at the end of 2015. According to the CML, gross buy-to-let lending saw month-on-month decreases in December, down 3 per cent by volume and by value, although growth year-on-year continued. (First-time buyers, meanwhile, borrowed £4.5bn for home-owner house purchase, up 7 per cent on November and 18 per cent on December last year.)

Steve Bolton, Founder of Platinum Property Partners, predicts that lending will continue to pick up across the first quarter of 2016, as borrowers move quickly to snap up an investment property before the stamp duty surcharge comes into play.

In the longer-term, though, he cautions that a downward pattern may become more common, as tax changes threaten to push some landlords out of the sector.

“With relief on BTL mortgage interest gradually being phased out, some landlords will find their growing tax bill eats away at profits until their investment becomes financially unviable,” he comments. “It’s not just us predicting an outflow of landlords: half of RICS surveyors agree. An inevitable consequence of this is rising rents for tenants as supply of private rental homes shrinks. This is hardly an effective solution to first-time buyer affordability.”

“Of course, not all landlords will suffer,” he adds. “Despite proclaiming the changes will introduce a fairer playing field for buyers and investors alike, wealthy corporate landlords are excluded from the changes, giving them an unfair and competitive advantage. It is because of the unjust and unlawful nature of these changes that I am co-leading a judicial review against the Government’s senseless tax grab.”

For more information on the judicial review, click here or visit

First-time buyer lending hits highest since 2007

Lending to first-time buyers in the UK hit its highest levels since 2007, according to the Council of Mortgage Lenders.

The latest CML figures show that first-time buyers borrowed £46.7bn for home-owner house purchase in 2015, which was up 4 per cent on 2014. This totalled 311,700 loans, unchanged from the previous year.

Home movers took out 365,800 loans, down 0.2 per cent on 2014, but the amount borrowed totalled £72.1bn was up 7% on 2014. Lending was also at its annual highest since 2007.

Home-owner remortgage activity was up 11 per cent by volume and 20 per cent by value compared to 2014. The value of remortgage lending was at its highest since 2008.

Gross buy-to-let also saw year-on-year increases, up 28 per cent by volume and 39 per cent by value.

Paul Smee, director general of the CML, comments: “Improving economic conditions, boosted by government schemes like Help to Buy, saw the highest quarterly number of loans  to purchase a home for eight years. The market has seen a gradual upward trajectory over the past few years, rather than rapid growth, and we’d expect this trend to continue with gross lending steadily increasing over the next two years.”

Author – Dan Johnson