In the Bank’s business conditions summary for May, it said that meetings with over 100 housing market contacts in March and April found that there had been a pick up in buy-to-let investments in Q1 as landlords sought to complete purchases ahead of the introduction of the 3% Stamp Duty Surcharge.
It said that contacts did not expect the tax changes on their own to lead to a substantial reduction in buy-to-let purchases.
However, the summary found there was a “risk that some landlords did not fully appreciate the implications of the reduced interest relief from 2017 saying this could lead to “downside risks to activity in the sector further out, if it subsequently led landlords to make a sharper adjustment to their portfolios.”
Mortgage interest relief for buy-to-let landlords is set to be cut from 45% to 20% beginning in April 2017.
The majority of contacts met with, expected overall housing market activity to be “muted” in the second quarter of this year, compared to the first, and comparable to levels seen in 2015.