UK Buy to Let Investors Retreat Under Tax and Stamp Duty Pressure

UK Property Development
UK Buy to Let Investors Retreat Under Tax and Stamp Duty Pressure

Buy to let mortgages have fallen to the lowest since 2013 as the stamp duty surcharge and scrapping of mortgage interest tax relief kicked in.

The latest figures from Bank of England have demonstrated that the punitive taxation measures and the stamp duty surcharge on buy to let properties in the UK have affected BTL property market: only 12.7% of all the mortgages issued in October-December 2017 went to buy to let investors – it’s the lowest number since 2013.

In 2016 buy to let mortgages slumped more than 2% from 14.4%, which was again a slide from a previous year’s 16.3%.

It looks like the trend will continue as landlords are hit with a stamp duty surcharge, raising the cost of buying a house, and the clampdown on mortgage interest tax relief. These punitive measures have eaten considerably in the profits on rental properties and make buy to let option less interesting for would-be investors.

The existing landlords are turning in bigger numbers to incorporating their business so that they can offset interest payments.

“Lending for buy to let was subdued as the impact of the stamp duty surcharge and the phased introduction of changes to mortgage interest tax relief continues to act as a deterrent for some. It is more likely to be would-be novice landlords having second thoughts about investing in property as we are seeing experienced investors remain committed to the sector, with a significant proportion incorporating”

Mark Harris of mortgage broker SPF Private Clients.

Read the original article on 2018. Follow Mortgage Solutions on Twitter