Government tax reforms are deterring people from making buy to let purchases, according to a study by the Council of Mortgage Lenders.
The number of buy to let mortgages being approved fell in April, according to the most recent figures, as existing landlords defer investment or consolidate their position and new investors are deterred from entering the market.
Recent government reforms to the sector, such as the roll out of Section 24, which phases out mortgage interest tax relief over four years and the 3% Stamp Duty surcharge on second homes, have left many landlords concerned about their financial position, with smaller investors especially hard hit.
The data, published yesterday by the Council of Mortgage Lenders, showed that buy to let lending had fallen 16% between March and April and the value of lending in the sector was down 16% on March, though it was up 8% on the same time last year.
Alastair McKee, managing director of One 77 Mortgages, said: “The market is less lopsided than one sided. Against a backdrop of cheap loans, Help to Buy and significantly reduced competition from landlords, first-time buyers are having a field day.
“With many landlords still reeling from the raft of tax and stress-testing changes, first-time buyers see an opportunity and are taking it.”
These figures are the first full year’s figure since the Stamp Duty changes came into effect and the Section 24 roll out began. As these changes are only now coming into effect, the CML say they expect the downward trend to continue.
If you’re a landlord concerned about the impact of Section 24 and Stamp Duty on your finances, contact Landlord Debt Advisory on 0161 222 4311, or on our website at landlorddebtadvisory.com.