First-time buyer activity surges as buy-to-let declines

Michael Lloyd

March 20, 2018

First-time buyer transactions increased last year as more landlords exited the buy-to-let market.

Figures from UK Finance show that in November 2017 there were 34,800 new first-time buyer mortgages, 15.2% more year-on-year while there were 6,600 buy-to-let house purchase mortgages, 1.5% less year-on-year.

London broker Trinity Financial also reported more first-time buyer activity, making up for a decline in buy-to-let deals.

Aaron Strutt, PR and communications director at Trinity Financial, said: “We don’t have data but I see submitted business figures and enquires coming through to me. We speak to a lot of the agents who say the same thing.”

Strutt says that there are many reasons for this, including the Chancellor’s cut of stamp duty under homes worth £300,000, a 3% surcharge in stamp duty for landlords, mortgage tax relief and tighter PRA stress tests.

He added: “It’s down to all of those things, the stamp duty cut, the decrease in buy-to-let. A lot of landlords are putting their plans on hold until they understand how the tax regime and the changes filter through.

“I also think in some areas house prices have come down and first-time buyers have seized on the opportunity. And the higher LTV mortgages also help. It’s quite good a time to be a first-time buyer.

“Some borrowers had to step in where the buy-to-let activity dropped and it happened to be first-time buyers. It’s not the next-time buyers because of having to pay more stamp duty which puts some people off.”

Jonathon Burridge from The Mortgage Broker said: “Buy-to-let has come down. It’s never been a big part of our business but we’ve seen a big change away from that to residential over the last 12 months. We’ve seen more first-time buyers.

“The government set out to restrict the buy-to-let market and help first-time buyers with changes such as the Help to Buy scheme and the stamp duty cut, and it appears to be working outside of London, away from the more expensive properties in the capital.”

Strutt went on to say that the buy-to-let changes have led to more remortgages and worried landlords staying put while they learn about how the changes affect them.

He said: “A few have sold out but they’ll just be looking to remortgage. I think a few have been quite scared they’ll have huge tax bills so they’ve been trying to do their research to understand it. I think many have just put their buying plans on hold while the changes are coming in.

“The lenders are trying to change their rental calculations to make it easier to fit so these remortgages go through and everyone doesn’t have to do these product transfers.

“We market to our clients as well to explain about the tax changes and I think the main thing we say is you need to talk to your accountant.”

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