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Buy to Let

Buy to Let

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It would be hard to suggest that either the buy-to-let or private rental sectors (PRS) have been the governmental flavor of the past half a decade; in fact landlords might be forgiven for thinking that they have often been portrayed as the ‘fall guys and girls’ of the housing market, as successive governments have looked to be pursuing housing measures designed to move property from the PRS back into owner-occupation.

Certainly, it’s not hard to have noticed a drop-off in the number of purchases made by landlords as a result of, for example, the extra stamp duty surcharge or indeed the phasing down of mortgage interest tax relief.

Which perhaps makes the decision to extend the most recent stamp duty holiday to ‘additional property owners’ – most notably, landlords – even more of a left-field call, albeit one that has also been taken up in Scotland, but not in Wales. Landlords in Wales will not get any holiday and may already be looking covetously at what their counterparts over the border will be able to save up until the end of March next year.

What perhaps interests us most however is just what this will mean for landlord purchase activity – let’s be frank here, landlords tend to know which side their bread is buttered on when it comes to making the most of such opportunities.

You’ll recall the glut of purchases that completed just prior to the introduction of the stamp duty surcharge back in 2016 and I suspect that those who were anywhere near thinking about adding to their portfolio, or indeed, moving into property investment for the first time, will now be thinking about bringing those plans forward.

At the top of the threshold – £500,000 – landlords in England and Northern Ireland are going to be able to save £15,000 in stamp duty costs, and that’s with a 3% surcharge still in place. Indeed, any landlord purchasing properties between £125,000 and £500,000 over the next eight months will make a saving on the previous stamp duty thresholds. Again, this is likely to focus the minds of landlords in those countries.

Advisers are already anticipating a boost to buy-to-let business off the back of this announcement. In a recent survey by Paragon Bank, 40% said they expect to write more in the next 12 months, and one can’t help but think that as the numbers are crunched, more landlords will sense the opportunity that exists in this space.

One wonders whether that adviser viewpoint is not slightly tempered by a concern about how quickly buy-to-let properties might be able to be moved through the system, with issues potentially around funding, LTV levels, product choice, surveyor and conveyancer capacity coming to the fore.

Recent data suggests that product choice is improving – Moneyfacts recently stated that June saw a notable increase, up 283 to 1,738 on May, and with securitisations starting to happen we are likely to see increased confidence from founders feeding into lenders, allowing them to broaden their offerings back to pre-lockdown levels.

However, the point about the speed of the process and the capacity of those working within it, still holds true. From our part of the market, we know that certain competitors are still working through their lock-down backlog, workers are still furloughed and there is a level of reticence about bringing some staff back, with worries about ongoing activity, which is clearly not helping.

We do not share the same concerns; in fact, we are actively looking for more lenders to forge relationships with in order to help the industry make the most of any boost to activity that the stamp duty changes will provide, whether those are from landlord or residential purchasers.

The important point is to have all the necessary capacity to make sure the greater demand actually transfers into completed transactions. That then provides the boost the housing market needs and provides further impetus to an economic recovery, which is undoubtedly required. Our ability to make the most of this period will be founded on capacity and efficiency, especially in the surveyor/valuation space – we all need to be working at the top levels to make the most of this opportunity.