The 3 per cent tax on stamp duty for buy-to-let investors, due to come into force from 1 April, is causing a surge in demand and consequent increase in prices, according to industry experts.
Chancellor George Osborne announced the measures during his Autumn Statement in November in order to cool the market and tackle the issue of second homes bought by those who live overseas.
Jeremy Leaf, former Royal Institute of Chartered Surveyors chairman and now north London estate agent, has seen an increase in investors looking to buy before April in order to avoid having to pay higher stamp duty.
He pointed out when one considers how long it takes to buy a house in England and Wales, there is not any time to lose.
He said: “On the ground, we have already noticed investors keen to buy before the middle of February so that they can complete by April and avoid the extra stamp duty take.
“Because of the tight timeframe, there is more risk in buying a property in a chain because of the chance of fall-through of the sale, leaving even less time to complete a transaction.”
Mr Leaf suggested landlords, or those buying a second home, who are keen to do a deal before April should also ensure they have a good solicitor on board and have spoken to an independent mortgage broker about finance.
“With the NAEA [National Association of Estate Agents] warning in December of a typical 50-day wait for a mortgage offer, borrowers can’t afford to hang around by going direct to a lender.
“A mortgage broker will help them identify the lenders who can move quickly and get an offer out in time.”
David Whittaker, managing director at Mortgages for Business, responded that a 50-day wait for a buy-to-let mortgage offer seems to be a little overly pessimistic.
He said: “Our own management information, which is updated weekly, is currently registering an average wait of just under 40 days from mortgage application to offer, although the best lender on this measure is currently taking slightly less than 20 days.
“We are recommending that our clients take professional tax advice regarding their specific circumstances before they make any more purchases.
“That said, there is still time to beat the stamp duty surcharge deadline but investors and their brokers need to get a wiggle on,” said Mr Whittaker, adding their own lending brand, Keystone Buy-to-Let Mortgages, has issued a deadline of 29 January for purchase applications to stand a chance of completing by 31 March.
Peter Gettins, product manager at London & Country Mortgages, noted a couple of firms – Foundation and Keystone – have promised to prioritise purchase applications, adding brokers will always be mindful of turnaround times and lender support will be all the more important over the next month or so.
He said: “While some vendors may be tempted to exploit the situation, I’m sure there will be others seeing the opportunity to secure a quick sale, and selling agents should be keen to make sure it goes through in time.
“Of course as the deadline gets closer, pressure will increase on valuers and conveyancers as well so again it will help to be at the front of those queues.”
peter.walker@ft.com
