It is likely that over the coming months the stamp duty changes will take some of the heat out of the buy-to-let investor market.
John Phillips is group operations director of Spicer Haart and Just Mortgages
According to recent statistics, less than half of aspiring homeowners believe that government schemes including the Help to Buy ISA will help them to raise the deposit for buying a house. Although the vast majority are aware of the schemes, some admitted that they made it more difficult for them to raise the required deposit, hence the increasing upward pressure on the prices of houses.
Supply vs demand
It is clear that raising the necessary deposit still remains one the biggest and most significant barriers to buying a property in the UK, and it is therefore understandable why the government has introduced these schemes. But despite this, the long-term issue around the lack of housing supply and the increasing demand for houses has meant affordability remains a key challenge.
Buy-to-let blitz
We have seen a steep increase in mortgage approvals since the beginning of the year and it’s possible that this strong lending activity is the result of an increasing number of buy-to-let investors dashing to beat the impending tax increase coming their way this April.
It can be argued that a significant proportion of investors continue to view buy-to-let as a good investment, compared to first-time buyers and those looking to sell and move home for example. This suggests that despite the various tax changes, buy-to-let remains an attractive option for many investors, but also acts as a barrier to property purchase for those with less of a deposit, adding to the growing issue of UK house prices. However, there is no telling if investors’ appetite and consumer sentiment around the UK property market will change, especially once the additional tax is actually in place.
Help to Buy
It has been reported that 150,000 people have become homeowners through the government’s flagship Help to Buy housing scheme while the number of properties coming to market has increased for the third consecutive year (RICS). Although this sounds positive, this increase is only slight and is likely to be the result of the short-term rush to buy properties before the April deadline.
In contrast, in January this year the number of first-time buyers in the UK housing market fell for the first time in four years and, according to a report by Halifax, the number of first-time buyers was down 0.5 per cent in 2015, with the average deposit rising above £30,000. I therefore strongly believe that the lack of supply of homes for buyers to choose from and the increase in the deposit needed to buy a property has inevitably had an impact on aspiring homeowners.
Therefore, despite the schemes which are clearly helping many people to get on to the housing ladder including the Help to Buy scheme which triggered an increase in building activity, even more work needs to be done to get the homes built that people want and need.
In my opinion, it is likely that over the coming months the stamp duty changes will take some of the heat out of the buy-to-let investor market and, with fewer young homeowners and soaring private rents, the Chancellor’s key priority must be housing.
