Posted on 19.5.16 by Matthew Owen
The Council of Mortgage Lenders (CML) released their latest statistics on Tuesday for the month of March which made for startling reading. The much pitted adversaries, landlords and first time buyers, both showed big year-on-year increases in lending activity, but the landlord borrowing was vastly superior, showing their eagerness to purchase before the second home tax changes were introduced.
For March 2016 landlords borrowed £7.1bn in a total of 45,000 loans according to the CML, a staggering jump of 163% from March 2015. First time buyers on the other hand borrowed £4.5bn in 28,100 loans over the same period, which signalled a 29% increase in comparison to last year. More widely on a quarterly level, BTL lending was at its highest level by volume since the third quarter of 2007.
The new figures highlight two main points:
- Landlords clearly wanted to beat the stamp duty changes that came into force on 1st April and so brought forward a planned purchase or made a smart decision to buy.
- The housing market as a whole is continuing to rise.
Changes here to stay?
Here at Gorvins our residential property department certainly noticed the increase in buyer activity, which is being labelled the biggest ever distortion in the property market. Director General at the CML, Paul Smee, suggests that although these supercharged levels of activity represent a substantial increase, they are likely to be temporary. There is bound to be a slow-down in BTL activity during the next lot of statistics for April as landlords assess the market, their own finances and the way forward for them.
In the meantime, this opens the market up for others either striving to buy their first home or looking to downsize as older children move out. However a potential sticking point to this plan is the fact that house prices are STILL rising.
According to property website Rightmove, the average asking price for houses in May is £308,000, a new record high. Of course this is for all property all over the country, but the price of what is considered a more typical first time property – two bedrooms or fewer – leapt by over £11,000 from April to May and now stands at £194,224. Such properties as these are the ones that have been fought for by landlords and first time buyers. It seems as though the boosted activity seen in March has been carried forward, which is why these heavy price increases have been seen, meaning many first-time buyers still can’t afford to get their foot in the door so to speak.
Residential Conveyancing at Gorvins
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