BTL investors warned of 'completion bottleneck'

BTL investors warned of 'completion bottleneck'

As buy-to-let investors rush to buy properties ahead of tax changes due in little over a month, concerns have been raised over a 'completion bottleneck'

Mortgage approvals reached their highest levels for two years in January with figures from one estate agent showing a 35% surge in buyer activity.

Data from HM Revenue and Customs however showed that the number of completed property sales failed to keep pace, falling from December to January.

Figures from the British Bankers' Association show its members approved 27% more loans in January 2016 than the same time the previous year, a rise it attributed to buyers “looking to get ahead of the increases in stamp duty for buy-to-let and second home buyers scheduled to come into effect in April”

Chancellor George Osborne announced a 3% rise in stamp duty for buy-to-let investors in November’s Autumn Statement, which has been dubbed “the buy-to-let tax”.

Ajay Jagota, founder and Managing Director of sales and lettings firm KIS, said: "The start of 2016 has seen a significant rise in mortgage borrowing and it seems perfectly reasonable to attribute that to property investors trying to get in ahead of April’s tax changes.


These changes are not insignificant and will undeniably drive up purchase costs, and are also being introduced at the same times as the scrapping of the 'wear and tear allowance' which allows landlords to claim tax relief for keeping their properties in good condition.

Anecdotally the industry is full of stories of a substantial number of homes stalled in the pre-completion stage and even a shortage of solicitors available to carrying out conveyancing. It’s clear we’re seeing something of a completion bottleneck. The real questions are whether or not buyers will persevere with the sales if their transactions are not completed when the tax changes come in. Will they take the hit, or will we see a spate of sales simply abandoned?

It’s more than likely that we will see demand from investors drop off after April, but this is unlikely to have a significant impact on the wider property market as residential buyers, particularly if first time buyers return to centre stage.”

Join our mailing list:

Leave a comment



Our Next Event

Buy-to-Let Roadshow April 2017

Buy-to-Let Roadshow April 2017

Crewe - 18/04/2017

Northampton - 19/04/2017

Essex - 20/04/2017

Brighton - 21/04/2017

Register now

Latest Comments

MBM Homelets
MBM Homelets 23 Mar 2017

Although this is a very positive step, there is little or no guarantee of the standard of workmanship employed by the tenants. We have had experience of a professionally decorated property being ' painted'...

view article
ajay
ajay 21 Mar 2017

How is the "robust evidence" looking now?

view article
NathanG
NathanG 20 Mar 2017

I've been watching the series so far and am completely baffled by the cases that were presented. Though, I don't think that we can protect ourselves from every scam possible - it will just make the scammers...

view article
Landlady14
Landlady14 01 Mar 2017

You would think so Niraj Shah! My experience only proves that there are varying qualitiers of professional in all aspects of property letting. None of the ones I have dealt with, from letting agents to...

view article
Mark
Mark 01 Mar 2017

Thanks for this article. Hopefully one day everybody's lifestyle will be eco-sustainable.

view article
Ben Taylor
Ben Taylor 28 Feb 2017

I was convinced that London was the most expensive!

view article
Alan Read
Alan Read 28 Feb 2017

Australia are leading the way in this I think. The trouble with Britain is we don't get enough sun to make use of solar power.

view article
James Powell
James Powell 27 Feb 2017

This is a very good news.

view article
DanHumphreys
DanHumphreys 27 Feb 2017

It sounds like a good idea. Anything to help the younger generation get a foothold.

view article
Matt
Matt 20 Feb 2017

Is this fake news?

view article
Matthew Hollywood
Matthew Hollywood 07 Feb 2017

Matthew Hollywood - Director Mishon Mackay Land & New Homes - Brighton The shortage of New Homes is in part effected by the lack of land sales. Land sales are held back because there is a disparity between...

view article
CommercialTrust
CommercialTrust 30 Jan 2017

Hi Graham, Would be interesting to see the above figure calculated against an investment via a Lt Company /SPV structure and if the investor found themselves pushed in to the higher tax bracket. Mortgage...

view article

Related stories

More articles from Landlords

Buy-to-Let Roadshow
April 2017

18th-21st April

4 days
7 specialists
4 locations
Free to attend

Click here to register now