Tuesday, 15 March 2016 08:44

Stamp Duty Changes

The Stamp Duty changes have greatly impacted on the mortgage industry

Although the stamp duty changes don’t come into effect until April, they have understandably had an impact on the mortgage industry and many lenders. The government hopes that the long term impact of this change in tax will see fewer homes being made available in the buy to let market but it seems as though the beginning of 2016 has been marked by lenders having a strong start to the year.

Many investors have been looking to complete property purchases before the changes come into effect. Mortgages approved by lenders rose by a third in January with respect to the year on year figures. This is partly driven by the stamp duty changes coming soon but it needs to be remembered that the beginning of 2015 saw a slow start to property sales and the mortgage industry alike. This was down to many people and investors waiting until the elections in May 2015 before deciding whether to invest in property or not.

In January of 2016, over 80,000 mortgages were approved, which is the highest figure in two years. The average loan value for property purchases rose to £178,900. If you want to find some great buy to let mortgage rates then have a look at www.conranfinancial.co.uk/mortgage-search

Another change scheduled for April 2016 is the removal of the “wear and tear allowance” which means landlords will no longer be able to claim up to 10% of their rental income for maintaining their property, regardless of whether they made any upgrades or improvements at all.

The mortgage industry is also facing up to the fact that there will be a change in the mortgage interest relief from 2017. Currently, a higher-rate taxpayer is able to claim up to 40% tax relief on mortgage interest but in 2017, this figure will drop to 20%.

The latter of these two changes are likely to impact on the overall yield a landlord or investor can receive, which means that they may have been instrumental in some people deciding against investing. The stamp duty changes may have that impact from April 2016 onwards but if it has had any effect on recent trends in the industry, it has helped facilitate mortgage applications.

It is worth having a look at one of our videos at www.conranfinancial.co.uk/about to see what we are about.

 

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