Managing director of Mortgages for Business, David Whittaker, said it may never be known whether the government achieved what it intended when it introduced the 3% Stamp Duty surcharge, from 1 April.
“It is impossible to measure the full impact of the Stamp Duty surcharge at this early stage – we may never be able to fully ascertain whether it achieved the Chancellor’s desired outcome because the measure was not made in isolation,” said Whittaker.
“The pending tax relief restrictions together with the proposed tightening of underwriting standards for buy-to-let mortgage contracts, as outlined in the PRA (Prudential Regulation Authority) consultation paper CP11/16, will also affect the housing market generally.”
Mortgage interest relief for buy-to-let landlords is set to be cut from 45% to 20% beginning in April 2017, while the PRA’s consultation paper ‘seeks to ensure that firms conduct their buy-to-let business in a prudent manner’, according to its summary of proposals, including curtailing ‘inappropriate’ lending.
“Whilst some might say that the consultation is, at this stage, just a consultation, be in no doubt that the Bank of England intends to impose the measures,” said Whittaker.
However, he believes that the changes can be overcome for investors, brokers and lenders with the right approach and experience.
“The Stamp Duty surcharge may put off a few would-be investors – the more professional landlords will take the hit, seek advice, adjust their strategy and continue to move towards operating their portfolios via limited companies.
“Generally speaking, all the changes will produce a tougher environment for buy to let but it remains a strong asset class in which the canny investor, the broker and the lender will survive.”