With buy-to-let investors rushing to snap up properties before the stamp duty hike came into effect in April, buy-to-let mortgage applications fell by 26% in March according to recent data.
That's the equivalent of a drop in sales worth £1 billion as many buy-to-let investors stopped buying at the end of February since they would be unable to complete the property purchase process before the aforementioned deadline.
Now, according to Equifax Touchstone, the total of buy-to-let and residential sales fell by £855 million, or 5%, between February and March. However, February’s residential sales figure of nearly £13 billion were the highest monthly total since the market crash of 2008.
The firm reports that only Scotland saw an increase in mortgage sales during March, while the steepest fall in sales was seen in Northern Ireland which recorded a 20% drop.
In London, sales fell by nearly 10% on February's figure.
What effects will the new stamp duty rates have?
Equifax Touchstone's relationship manager, Iain Bell, said: “Borrowers initiated their transactions in good time on the advice of their lenders to avoid an 11th hour panic. The next big question is what effect the new stamp duty rates will have in discouraging investors from entering new deals.” He added that, despite growing economic uncertainty, property is still an attractive investment for most people.
These findings were mirrored in a RICS survey which found that sales in January and February were brought forward or temporarily boosted as buy to let investors rushed to complete transactions before the stamp duty changes.
Surveyors have seen new buyer enquiries drop sharply in London, whereas demand in Yorkshire, the South East, and Scotland are described as being 'broadly flat'. However, demand looks set to pick up, with demand outstripping supply, and buy-to-let properties still remains an attractive investment with long-term capital growth and rental yields, says the RICS report.
Airbnb a growing problem for landlords
Meanwhile, the fast-growing Airbnb business model is posing a huge threat to the livelihoods of landlords, warns Landlord Action. The firm says over the past year they have dealt with a growing number of cases where tenants have sublet a landlord's property without permission.
In addition to the tenancy agreement breach, Landlord Action says landlords run the risk of breaching their building’s insurance and mortgage terms. One big problem is Airbnb gives tenants a chance to view themselves as offering a business but they do so with an asset that is owned by someone else.
Founder of Landlord Action, Paul Shamplina, said: “We have seen cases where tenants are making thousands of pounds and in one case more than 300 people stayed in the landlord's property, unknown to them." |
