Bank of England says Buy-to-Let Mortgage Demand to Grow
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Bank of England says Buy-to-Let Mortgage Demand to Grow

Clock  2 minute read

Carl Shave Carl Shave | January 21, 2016

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Following a significant leap in demand in late 2015, lenders are now expecting far greater demand for buy-to-let mortgages in the coming weeks. Figures have shown an increase in buy-to-let mortgage lending in recent months on the whole, and 30% more lenders expect demand to grow in the next 3 months than those predicting it to fall.

Stamp Duty Kicking In

Much of the reasoning behind these predictions seems to have developed from the dramatic changes coming in stamp duty. A recent announcement from the Chancellor has seen an additional 3% of stamp duty charged to each of the price bands. Whilst the 3% may seem like a small figure at first glance, the manner in which it is charged can equal a dramatic increase in the cost of the property. As an example, the calculation for a £275,000 property would be as follows. Band 1 – £125,000 + 3% Band 2 – £125,000 + 5% Band 3 – £25,000 + 8% Which would make the stamp duty cost £12,000, a 200% rise from the current £3,750 worth of stamp duty. These dramatic changes are likely to have pushed landlords to wrap up the best buy-to-let deals sooner rather than later in order to capitalise whilst the marketplace is still favorable. This trend is likely to continue as the stamp duty changes come ever closer.

The Expert’s View

With the recent changes in stamp duty for second property purchases, the market is already reacting with potential buy to let investors advising vendors that they wish to complete before the end of the current tax year. This is likely to cause a spike in purchase business over the coming months however, when combined with the changes in the income tax rules being phased in over the next few years the overall increase could be slightly more subdued than first expected. If you would like to discuss getting into the buy-to-let market or increasing your current portfolio, contact the Just Mortgage Brokers today. You can call us on 0800 1143575 or use our contact form.

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