April’s stamp duty increase for buy-to-let investors is already having an impact on the housing market, with the latest figures from the Council of Mortgage Lenders (CML) estimating that gross mortgage lending reached £18.5bn in April, down 29%, or £7.7bn compared to the previous month’s lending total of £26.2bn.
The data does not come as a surprise given that many buy-to-let investors rushed to beat the tax hike before 1 April by bringing forward property purchases that would otherwise have taken place later in the year.
“The early rush we saw in the spring months is easing up and April marked an adjustment phase in the property market. But a reduction in lending is to be expected, and is certainly no cause for alarm,” said Richard Sexton, director of chartered surveyor e.surv.
David Brown, CEO of Marsh & Parsons, agrees that April’s lending was never going to “live up to the March hype”.
While April's mortgage figure is down compared with March, it is still 16% higher than the £16bn lent in April 2015, the CML said.
“Underlying annual growth in April shows a more sustainable path aside from any short-term fluctuations – and the need for buy-to-let mortgages to support the role of landlords,” said David Whittaker, managing director of Mortgages for Business
Last month’s lending data was also the highest lending total for the month of April since 2008, when £25.3bn worth of home loans was issued to homebuyers, including landlords.
CML economist Mohammad Jamei said: “As we move past the stamp duty change that came into effect at the start of April, we expect to see a quieter second quarter, as some transactions that were due to take place were brought forward to the first quarter of this year. This is likely to mean that over the next few months buy-to-let takes a back seat as lending is driven by first-time buyers, movers and remortgage customers.
“The underlying picture still shows signs of growth, as the market remains underpinned by strong fundamentals such as increasing wages and rising employment. But it is possible that the uncertainty around the upcoming EU referendum in June will weigh on activity in the upcoming months.”