The storm before the calm for buy-to-let
With the changes in the buy-to-let arena looming over the sector like an angry schoolteacher, it comes as no surprise that there has been something of a sudden surge in landlord activity.
The number of mortgage approvals for buy-to-let properties were up to the substantial amount of 23,300 in November and, although this was down by 6% when compared to October, it indicates a 35% increase from the same time last year.
Why is there a sudden increase?
It’s likely that landlords and investors are doing their utmost to sort any new properties before the new 3% additional surcharge to Stamp Duty Land Tax (SDLT) comes into effect in April.
This comes after the news that there will also be a change to the tax breaks that are available to landlords that will take effect in a staggered manner beginning in April 2017.
Is there a reason for the changes to the sector?
The changes in SDLT could stop buy-to-let growth in its tracks and may well see the disappearance of the boom that has been present over the last decade.
The move made by the Chancellor has made it very clear that he is on the side of ‘Generation Rent’, and by shutting off future investment in the Private Rental Sector (PRS), he’s certainly shifted the view of the market. With fewer properties in the PRS, housing availability will increase and make it easier for more first-time buyers to step onto the property ladder.
What’s next for buy-to-let and landlords?
It’s likely that this increased activity will continue right up until the changes come into effect in April. There is a chance that landlords will decide to pass their extra costs onto tenants so, naturally, there is a chance that rents may go up. However, many experts are saying that landlords will factor the costs into their realistic outlooks on returns.