First-time buyers are on the up – seeing Buy to Let fall along the way.
UK Finance, a lobby group for the financial services industry, sees its latest stats as a sign government policies and tax changes are rebalancing the housing market.
Those stats show the number of first-time buyers rose in May, while the number taking on new Buy to Let mortgages fell, – with 32,200 new mortgages completed for first-time buyers over the month, 8.1% more than in May last year.
And the £5.4bn of new lending was up 12.5%.
However, the number of new Buy to Let mortgages fell by 9.8% in May compared with a year earlier to 5,500. Lending was £700m, 22% lower than in the same month last year.
“The mortgage market is seeing a pre-summer boost, driven by a rise in the number of first-time buyers and strong re-mortgaging activity,” Jackie Bennett, the director of mortgages at UK Finance, said.
“Meanwhile, purchases in the Buy to Let continue to be constrained by recent regulatory and tax changes, the full impact of which have yet to be fully felt.”
The stats suggest changes to stamp duty introduced by the government in April 2016 are cooling on the Buy to Let market.
Despite the rise in first-time buyers in May, Bennett says they are still struggling to get on the property ladder.
“Affordibility remains a challenge for some prospective buyers and this is reflected by a gradual increase in loan to income multiples,” she said.
The number of people moving home was also up in May, with 31,100 new home-mover mortgages completed, up 4.4% compared with a year earlier.
Jonathan Samuels, the chief executive of the property lender Octane Capital, said the stats were a “perfect snapshot” of the changes to the UK housing market in recent years.
“First-time buyers are in the ascendancy while amateur landlords are beating a fast retreat. – what activity there is within Buy to Let is primarily the remortgaging of existing portfolios or properties in order to maintain some kind of margin.
“While professional landlords and institutional investors remain active, amateur landlords are fast becoming an anachronism.”
The Residential Landlords Association’s research wing, PEARL, fears a net loss of 133,000 homes for private rent over the next year – and wants government to scrap the stamp duty surcharge rethink on lettings taxation can avoid it.
This research references the government’s own figures as showing a loss of 46,000 private rented properties in England alone between March 2016 and March 2017.
The RLA says that based on questioning over 2,600 landlords, no fewer than 84% have seen tenant demand increasing or at least remaining stable with much of the reason for the fall in supply being down to the start of the phased elimination of mortgage interest tax relief for Buy to Let investors – and the introduction of the 3% stamp duty surcharge on additional homes.
While the Build To Rent sector contributes 2% of all private rented households in the UK.
The RLA wants the stamp duty surcharge scrapped when landlords or investors aim to convert empty offices and shops into rental residential units, or turn large homes into small self-contained properties or bring one of the over 605,000 empty dwellings across England back into residential use.
“The vast majority of landlords are individuals and small businesses, providing good housing to their tenants and supporting local economies, we need to support and encourage them to provide the long-term homes to rent needed.
“The government should use taxation more positively and not penalise landlords who are contributing to badly needed homes to rent,” said RLA policy director David Smith.