Buy-to-let lending tumbles by almost half since introduction of Stamp Duty surcharge

Buy-to-let lending is down 47% on levels before the introduction of the 3% Stamp Duty surcharge levied on the purchase of additional properties.

It is also down 64% compared with the pre-2007/2008 housing market crash.

In a new report on the residential housing market, Cushman & Wakefield say that with further phasing in of the reduction in income tax relief will ensure that lending activity stays muted.

The consultancy also notes that some landlords are selling off properties, and that there are only limited numbers of new investors entering the market.

Nevertheless, Cushman & Wakefield think that housing stock in the English private rented sector will contract by no more than 3% over the next two years.

Its report also shows a mismatch between supply and demand, particularly with the most expensive and cheapest properties.

In March, 6.1% of properties listed on Rightmove were at over £1m. However, just 2.7% of completed sales that month were for over 2.7%.

The opposite was true in the sub-£200,000 market, which accounted for 45% of all sales but just 30% of listings.

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15 Comments

  1. JMoo31

    This is just the start. We’ll see 100s of thousands lose their rental homes because landlords are forced to sell due to the unique to them pernicious tax attack by a Tory government and supported by a Marxist led Labour govt both of which care not an iota. This typifies today’s politics, politicians and the mob popularism screaming for the heads of anyone who tries to provide for them selves and dares to provide accommodation to rent as an individual. Terrorist have much greater support in the U.K. than landlords who are the easy target used to distract the thick baying mob from real substance of what’s wrong and not being addressed and provides the evil a leg up where their expensive tower blocks have minimal competition. I despair at the cruelty on display via this decades long attack on landlords in the private rented sector, who just want to provide good homes for others and a secure future for themselves. They are well aware the lying feckless politicians have no intent whatsoever in honouring the plethora of lies and promises the stupid mob have been taken in by. It’s so sad and obvious it’s almost funny if it wasn’t so utterly dishonest and evil.

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    1. Barry20

      Couldn’t put it better myself

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  2. eltell

    Just couldn’t agree more.  Never in the field of human sanctity have so few done so little for so many – and that includes the likes of Shelter, Generation Rent, Citizens Advice et al.

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  3. The_Maluka

    Come on lads, lets look on the bright side.  As an unencumbered landlord I can increase my rents in line with my encumbered colleagues and make more profit.  That many landlords are exiting the market allows me to increase rents even more for I have a queue of tenants waiting for accommodation.  I can make even more profit at the expense of the tenants (section 24 is not called the tenant tax without reason).  I salute George Osborne for imposing the section 24 tax for he has made me a rich landlord, what do I care about other landlords becoming bankrupt, what do I care about tenants losing their homes, George doesn’t so why should I.

    Actually I do care.

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  4. AgencyInsider

    As a piece of social/political engineering Buy to Let always was a stinker – because for most ‘investors’ it was really Borrow to Let and as such made those investors vulnerable to the vagaries of the financial world and the politicians of the day (as they are now finding out).

    It sucked property out of the sales market, caused house price inflation, and made life all the harder for first time buyers. As a scheme to ruin the stability of the sales market it was a belter. Right up there with Thatcher’s stupidity in selling off council properties.

    I for one will not be sorry to see Buy to Let consigned to the dustbin of history. And I say that as someone who has bought to let (not borrowed).

     

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    1. Barry20

      “It sucked property out of the sales market” where to? a black hole – no it’s still there providing homes for people who want to rent or cannot afford to buy. It is often providing more accommodation as larger properties being used as HMOs.
      “…caused house price inflation…”  not according to the English Housing Survey, only 7% of 150% rise was due to BTL. Please specify your source?
      “….made life all the harder for first time buyers…”  again not according to the English Housing Survey, who state only 1 in 30 FTBs competes with BTL Landlord. Please state your source?

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      1. AgencyInsider

        Sources Barry20? Only about 35 years experience in the estate agency business coupled with being old enough to remember a price-stable property market where mortgage lending ran at 3 x first income and 1/2 x second income. Where social housing was a solid, well-established, and generally well run part of the housing mix. And where we didn’t nationally encourage people to hoover up cheap properties and then cover their borrowings from income derived from those who were less able to take advantage of the rotten scheme.

        When property is bought by landlords it no longer changes hands every five years or so which was the normal turnover period of owner-occupied property. That is why I say BTL sucked property out of the sales market.

        The boom in BTL lending – leveraged on rental incomes – did fuel price inflation – along with higher multiples on general mortgage lending.

        I take a sceptical view of anything put out by DCLG and I simply don’t believe that only one in thirty FTBs competes with a BTL landlord.

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        1. Home Provider

          Agency Insider
           
          You bought without borrowing so you “sucked property out of the sales market, caused house price inflation, and made life all the harder for first time buyers.” as you put it.
           
          So it’s OK if the rich elite does that, but not the hoi-polloi?
           
          Did you increase the supply by restoring a derelict house, converting a commercial property, turning a large property into an HMO, or financing the construction of a new-build off-plan – like thousands of us who borrowed?
           
          If landlords had not borrowed to let there would now be fewer habitable properties, so prices would be higher than they are.  And the proportion of rental properties would be much lower, so rents would be much higher, and the mobility of labour greatly reduced.
           
          It occurs to me that your antipathy towards those who borrowed to let may come from the fact that they were competing with you for tenants, and that there was a reduction in the number of properties that you could earn commission from by churning them every five years, overlooking the extra profit you made from your agency letting a bigger pool of properties.
           
          And your antipathy has blinded you to logic.  We do not let to people who are “less able to take advantage of the rotten scheme [borrow to let]”.  We do not let to frustrated landlords, we let to people who are unwilling or unable to buy a property in the area in which they have chosen to live.  They are in fact benefiting from BTL – because they are living where they want to be.

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          1. AgencyInsider

            Perhaps I did not explain myself clearly enough Home Provider. I do not blame anyone for taking advantage of the BTL scheme. You miss the fact that I go back to waaaaay before BTL was ever thought of. When the property market was far better balanced and where people could, generally aspire to, and achieve, home ownership in their 20s and 30s. I am saying that BTL skewed and disrupted the market and contributed to the ills that afflict the market today – where home ownership is unatainable for a significant proportion of young people.

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            1. Home Provider

              I did not refer to blame, I merely exposed your cant in claiming that BTL was a stinker that “made life harder for FTBs” although you yourself had bought property to let.
               
              You have not said you increased the supply of dwellings so I will assume you didn’t.
               
              You claim the market was “better balanced” before BTL.  In 1996, when BTL was introduced,  owner-occupiers comprised 68.5% of households in England.  In 2006 they comprised 70.1%.
               
              Their share started to decline in 2007 due to the lending crisis.  It continued to decline because it became more difficult for them to get mortgages, not because of BTL.  Prices fell between 2008 and 2012.
               
              You wrote “Only about 35 years experience in the estate agency business coupled with being old enough to remember a price-stable property market”.
               
              Price stability?  Your memory is as faulty as your analysis.
               
              The Nationwide’s records show that after you started in 1983, house price inflation was in double digits nearly every year.  In 1988 it hit 29% – but in 1990 it was minus 11%.  Prices continued to fall until 1995, apart from a slight pick-up in 1994.  They then rose every year (hitting 25% in 2002) until 2008 when they fell by 15% following the lending crisis revealed by the run on Northern Rock in 2007.
               
              I go even further back than you.  House price inflation was 21% in 1971, 42% in 1972, and 24% in 1973.  This was when mortgages were rationed and you had to have been a regular saver with a building society before they would even give you an application form for a loan.
               
              In 1973 came the oil crisis, then the 3-day week, and recession.  But house price inflation continued in single figures until 1977.  In 1978 it was 28% and in 1979 it was 31%.
               
              So much for price stability.
               
              It is a myth that every tenant is willing and able to buy a property, and that if it wasn’t for BTL he or she would have been an owner-occupier.  If BTL had not increased the supply of dwellings, tenants would be paying a lot more in rent, or would have to live with their parents.
               
              It is appalling that an estate agent would repeat the fallacious propaganda of the supporters of Section 24 which will make thousands of the poorest members of society homeless, just like a milder version did recently in Ireland.   In fact it has already started to do so here in the UK.

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        2. Deltic2130

          Agency insider. There’s no way you’re in the business. If you were you’d have access to all the real info that people in this business actually do. You do realise the estate agency trade bodies completely disagree with you on every count, right?

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        3. Barry20

          I think “Home Provider” has said it all.  Your analysis is flawed and anecdotal.

          You provide no evidence to back your contention that BTL landlords have driven up house prices, and totally ignore the increase in population (due to immigration, people living longer, people delaying marrying, higher divorce rates, etc) coupled with woefully inadequate levels of house building and Government interference with programmes, like Help to Buy, which are widely acknowledged as having driven prices up.

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  5. Jacqueline Emmerson

    Having grown up in a council house with security of tenure it upsets me to know that so many families with young children are having to move time and time again. If this or previous governments had put money into building council houses they might be able to hold their heads with pride. As it is there is a shortage of rental property to start with, this policy makes it worse. Children suffer. In the meantime let’s thrown money at help to buy schemes which allows national builders to make extra profits at the cost of the tax payer. Not everyone can afford to buy a house, they need to be catered for throughout their lives. Otherwise we are returning to the housing crisis of pre war Britain.

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  6. Rent Rebel

    “Forced to sell and make tenants homeless” say landlords.

    No, you’re not.

    1. Offer those tenants first refusal on your sale
    3. Or sell it with tenants in situ.
    2. Or let your tenants find something else and move out – before you complete on the sale.

    No reason to make your tenants homeless IF you put their needs above yours. That’s the bit you really struggle with.

    Your sale/profit always comes before their welfare though eh.

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    1. Barry20

      1. If Tenants were in a position buy why would they not have done so already given prices generally are rising inexorably?
      2. Government policy is discouraging Landlords from buying more property. Therefore Landlords selling need to sell to owner-occupiers with vacant possession.
      3. Landlords have to legally give 2 months notice, and if selling many Landlords will give 3 or 4 months notice. But with them & other Landlords selling up there’ll be fewer properties available to rent. So waiting until the Tenants move out of their own accord isn’t viable when a Landlords has to sell or face bankruptcy.
       
       

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