UK lending hits highest March level since 2007

UK lending hit its highest level recorded in a March since 2007, as buyers rushed to beat the new stamp duty deadline.

From 1st April 2016, buyers of additional homes in the UK, including buy-to-let properties, are charged an extra 3 per cent in stamp duty, a levy that saw purchasers racing to complete transactions in the first quarter of the year. That pushed gross lending up to £25.7 million in March 2016, 43 per cent higher than February 2016 and 59 per cent higher than March 2015.

Gross mortgage lending for the first quarter of this year was therefore an estimated £62.1 billion, the same level as in the previous quarter, but 39 per cent higher than the first three months of 2015.

“The distortion caused by this stamp duty change appears to be larger than any previous stamp duty change we’ve seen,” says CML economist Mohammad Jamei. “As a result, we expect there will be about 10,000 fewer mortgaged transactions each month in the second quarter of 2016 than would otherwise have been the case, offsetting the increase in activity seen in March.

“This peak of house purchase lending could be the highest we’ll see in a single month for the rest of the year,” agrees Richard Sexton, director of chartered surveyor e.surv.

With buy-to-let lending out of the spotlight, the focus moves to first-time buyers, adds e.surv, noting signs of a “positive upcoming Summer”.

Indeed, house purchase loans to first-timers totalled 11,487 – up a massive 19.3 per cent from a year before.

Mortgage lending marches higher, as buy-to-let investors rush to beat stamp duty deadline

13th April

Mortgage lending marched higher in February 2016, driven by growing demand from first-time buyers, home owners and buy-to-let investors.

Home-owner house purchase lending rose 21 per cent year-on-year in February 2016, according to the Council of Mortgage Lenders, with home-owners borrowing £8.7 billion for house purchases. This is the most amount borrowed in the month of February for house purchase since February 2007.

First-time buyers borrowed £3.4bn, also up 21 per cent on February last year, while remortgage activity totalled £4.8bn, down 17 per cent on January 2016 but up 37 per cent on February 2015.

Landlords borrowed £3.7bn in February, unchanged month-on-month but up 61 per cent year-on-year, as buy-to-let investors rushed to beat the deadline for the new stamp duty surcharge on second home purchases.

The monthly lending levels have remained “relatively consistent” for the buy-to-let sector in the past six months, notes the CML’s latest report, although annual growth highlights the spike in demand compared to traditional seasonal patterns. Remortgaging, meanwhile, is the biggest driver of increased activity in the buy-to-let sector, with 59 per cent of gross buy-to-let lending being remortgage compared to just 27 per cent in the home-owner space.

Paul Smee, director general of the CML, comments: “In 2016, there have been substantial increases in house purchase and remortgage activity year-on-year. This reflects the sluggish market in early 2015, perhaps driven by election uncertainties. Buy-to-let has also seen substantial year-on-year increases, with particularly strong growth in remortgaging, a pattern which we have seen in the buy-to-let sector the past six months. Activity has been boosted by landlords seeking to complete purchases before tax changes in April.”

Steve Bolton, Founder of Platinum Property Partners, adds that landlords are “clearly taking advantage of the low rates available on the market”, before new rules in April 2017 plan to remove their ability to claim mortgage interest payments as a business expense – making many buy-to-let properties less profitable, or not profitable at all, for smaller landlords.

Bolton is now leading a legal challenge for a judicial review of the Finance Act 2015, which features the clause relating to the mortgage interest tax change, warning that the rule would threaten the future of the private rented sector in the UK.

“BTL activity could plummet in the future as the cost of running a BTL business continues to grow due to recent Government legislation,” cautions Bolton, calling the Finance Act “a real threat”.

“Tenants will also be hit by higher rents as landlords struggle to stay profitable, reducing their ability to save for a deposit and shattering the illusion that attacking landlords will improve owner-occupancy levels,” he explains. “Landlords play a vital role in contributing to Britain’s housing stock and it is ridiculous to reduce their capacity to do so at a time of low housing supply.”

“We do not expect activity to show such strong year-on-year growth later in the year,” adds Smee.

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

17th February 2016

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