'Significant rise' in buy-to-let mortgage lending ahead of new surcharge
Data from the Council of Mortgage Lenders (CML) has revealed that buy-to-let mortgage lending increased by 35% during November compared with a year earlier.
The increase comes ahead of the introduction of a new surcharge on additional residential properties, which takes effect from April.
Under the new rules, higher rates of Stamp Duty Land Tax will be charged on purchases of additional residential properties above £40,000, such as buy-to-let properties and second homes.
In its draft Budget in December, the Scottish Government also confirmed that similar changes will be applied to the Land and Buildings Transaction Tax in Scotland.
These higher rates will be three percentage points above the current rates of duty.
The changes may account for the sharp rise in buy-to-let mortgage lending.
Despite strong growth in the buy-to-let sector, the CML figures reveal that the number of buy-to-let loans advanced in November was down by 6% on the previous month.
Overall, some 60,100 mortgages were advanced during November – this total was, however, down by 9.2% compared to October 2015.
Director general of the CML, Paul Smee, stated: ‘As expected, mortgage lending activity eased back as the normal dip in the winter months began.
‘There was still growth across all lending types in November compared to the year earlier, suggesting continued improvement. Our forecasts anticipate that gross lending will continue a slow but steady upward trajectory over the next two years.’