Buy-to-let valuation instructions have dropped sharply since the stamp duty surcharge was introduced on additional properties – and now the government’s proposed ban on letting agents charging fees to tenants appears to have ‘unsettled the market again’, according to Connells group’s survey and valuation team.
It has been a tough year for buy-to-let landlords, with a raft of changes introduced by the government prompting concern that those with low profit margins could end up making a loss as a result of various tax alterations, which will push some out of the market altogether.
The introduction of the 3% stamp duty surcharge in April, the scrapping of the 10% Wear and Tear tax relief, the fact that mortgage tax relief is set to be phased out from next year, the need for landlords to now check the residency of their tenants, the fact that the Bank of England’s Financial Policy Committee will be granted greater powers over the buy-to-let market next year.
The list of negative changes in the sector goes on, which largely explains why the number of valuations carried out for the buy-to-let sector fell 6.1% month-on-month and 18.5% on a 12 month basis.
John Bagshaw, corporate services director of Connells Survey & Valuation, said: “2016 has been something of an annus horribilis for landlords. They have had to contend with the reverberations of the 3% stamp duty surcharge and the removal of 10% 'wear and tear' allowance”
But while the number of buy-to-let valuations is down 18.5% compared to November last year, remortgaging activity is up by more than 20%.
“Homeowners want to lock into deals before rates rise,” Bagshaw added. “There’s no doubt that remortgaging is driving the mortgage market at the moment.”
There was a surge of activity in people looking to remortgage in November with valuations increasing 4.9% compared to October and a 24.6% rise on an annual basis.
On a seasonally adjusted basis, overall valuation activity was virtually static in November as the number of valuations fell marginally, down 0.1% on October. There was, however, a 6.6% increase in the number of valuations undertaken compared to November 2015.