5Bn of extra mortgage lending in March after stamp duty rise

Landlords aiming to beat the stamp duty rise, has led to up to £5Bn worth of extra mortgage lending in March.

There has been a “late surge” in gross mortgage lending, as it hit £25.7Bn last month, 59% higher than the previous March, according to the Council of Mortgage Lenders (CML).

This is due to the 3% stamp duty surcharge, announced in the Autumn Statement by Chancellor George Osborne and introduced on 1 April, for purchases of homes that are not the buyer’s main residence (second home or buy-to-let).

The impact of the change in tax is expected to continue to ripple through the housing market for the next few months, although the CML said it now expected sales to drop off after the extra tax came in.

CML’s analysis suggests there were £4-5Bn in extra lending than what would have usually been the case, which translates to about 30-35,000 more transactions as a result.

CML Economist, Mohammad Jamei, said: “The distortion caused by this stamp duty change appears to be larger than any previous stamp duty change we have seen.

“As a result, we expect there will be about 10,000 fewer mortgaged transactions each month in the second quarter of 2016 than would otherwise have been the case, offsetting the increase in activity seen in March.”

HM Revenue ad Customs (HMRC) also recorded the surge in property sales, with a total of 161,990 properties sold in the UK during the month.

The Bank of England has announced plans to subject landlords to a series of affordability tests, where their personal income and expenditure could be scrutinised by lenders before they decide to give them a mortgage.

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