Market braces for lull after buy-to-let storm
Sun 03 Apr 2016
Buy-to-let investors were racing to beat the new 3% duty surcharge right up to midnight on 31 March as a frantic
first quarter drew to a close.
The question now is whether the higher charge will hobble demand for buy-to-let and trigger a slowdown in house
David Brown, chief executive of London estate agents Marsh & Parsons, said the run-up to the 1 April deadline
was extremely hectic. "From Tuesday through to Thursday, we handled more than quadruple the number of daily
exchanges wed usually expect.
"The 1 April deadline definitely drove this spike, and exchanges were happening right up to the wire on Thursday.
We had solicitors working until midnight yesterday to push paperwork through in time."
David Finlay, distribution director of Northview Group, said brokers have had a busy first quarter but were
optimistic that demand will hold firm.
"While there may be an initial lull in this activity, buy-to-let remortgage business will continue and we expect the
market to return to normal levels quickly."
Finlay said the private rental sector plays an important role in our housing market, providing homes for millions of
people across the UK. "It is this demand for rental property that provides a stable foundation for buy-to-let."
Jeremy Duncombe, director, Legal & General Mortgage Club, said it is still too early to say how the surcharge will
affect the sector.
"As such, it is crucial that the Chancellors amends are allowed to bed-in before any further action is even
considered, whether that be by the Government or regulatory bodies."
He said the Prudential Regulation Authoritys consultation paper on revised underwriting standards for buy-to-let
could backfire. "Too many layers of intervention like this could actually inhibit the market."
Duncombe added: "The buy-to-let sector as a whole has come under increased scrutiny recently, with many
looking to blame landlords for the upwards pressure on house prices.
"However, only around 30% of buy-to-let properties are funded by a mortgage, and 60% of lending volume is
actually made up of remortgages.
"Any lending restrictions imposed will therefore only be impacting a small percentage of this market."