Stamping out concerns for the buy-to-let market

Vikki Jefferies

February 27, 2019

Vikki Jefferies is proposition director at PRIMIS and PTFS, calls for new incentives and products to provide the buy-to-let market with some much-needed TLC after the flurry of stamp duty changes it has dealt with over the past few years

2017’s stamp duty relief for first-time buyers saw the tax abolished on the first £300,000 for homes worth up to £500,000. The initiative was designed to encourage this new pool of borrowers onto the property ladder, and the evidence suggests that it’s had the desired impact. In his Autumn Budget speech on 29 October 2018, Philip Hammond confirmed that the number of first-time buyers had reached an 11-year high, with over 120,000 borrowers having benefitted from the stamp duty relief introduced the previous year .

It is therefore unsurprising that first-time buyers have welcomed the latest extension of stamp duty relief with open arms. However, it’s quite a different story for landlords, who are still wrestling with the stamp duty changes that first came into effect in April 2016. Whilst the Chancellor’s latest Budget speech announced that the buy-to-let market was to be left untouched, the disruption caused by changes first initiated by George Osbourne are still proving to be a major challenge for this community.

A series of unfortunate events

The buy-to-let market has been hit with a flurry of regulation over the past three years, most of which has been met with an unfavourable sentiment. 2016 was the defining year for these changes, with landlords and those with a second home impacted by a 3% stamp duty premium in an effort to increase the levels of housing stock available for first-time buyers. Additional changes launched in 2017 are also still ongoing, including modifications to wear and tear allowances and the phased implementation of reduced tax relief for higher rate and additional rate payers.

Landlords’ worries have only been exacerbated further as the PRA has increased the required verification for a landlord’s application process, setting out new rules around houses of multiple occupancies. Dissatisfaction towards these changes have been made very apparent, with the market plunging by 20% in March 2018, compared with the same month in 2017. These changes, coupled with flat house price growth, mean that returns for buy-to-let investors remain a challenge.

Making landlords’ lives easier

With the government announcing plans to increase the number of shared ownership property owners over the next few years, landlords could really benefit from a helping hand as they continue to navigate this rocky terrain. The buy-to-let sector might not look wholly appealing right now, but over time, and with the right broker support, incentives and products, landlord confidence can be restored.

Advisers will play a key role in maintaining open lines of communication with their clients to ensure that landlords are kept up to date on any changes in the market. PRIMIS and PTFS organise several events throughout the year for brokers to learn about and discuss key industry issues, updates and technology support available. Our continued investment in technology reflects our commitment to securing the best tools available for brokers so that they can consistently deliver positive customer outcomes.

An onus on new incentives and products

It is clear that then that the buy-to-let market is one that needs particular attention whilst landlords continue to understand the regulatory changes that have come into effect in recent years. Equipping advisers with the information and tools they need to serve their clients and help them maintain, or potentially grow, their portfolios is essential.

In addition to this, what the sector could really benefit from is the introduction of new incentives and lending products which will go a long way towards supporting landlords in regaining confidence in the sector and boosting this market further. 2019 is set to be a bumper year for the mortgage market and I hope the buy-to-let sector gets its fair share of innovation to help restore its former glory.

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