Buy-to-let investors were racing to beat the new 3% duty surcharge right up to midnight on 31 March as a frantic first quarter drew to a close.
The question now is whether the higher charge will hobble demand for buy-to-let and trigger a slowdown in house price growth.
David Brown, chief executive of London estate agents Marsh & Parsons, said the run-up to the 1 April deadline was extremely hectic. “From Tuesday through to Thursday, we handled more than quadruple the number of daily exchanges we’d usually expect.
“The 1 April deadline definitely drove this spike, and exchanges were happening right up to the wire on Thursday. We had solicitors working until midnight yesterday to push paperwork through in time.”
David Finlay, distribution director of Northview Group, said brokers have had a busy first quarter but were optimistic that demand will hold firm.
“While there may be an initial lull in this activity, buy-to-let remortgage business will continue and we expect the market to return to normal levels quickly.”
Finlay said the private rental sector plays an important role in our housing market, providing homes for millions of people across the UK. “It is this demand for rental property that provides a stable foundation for buy-to-let."
Jeremy Duncombe, director, Legal & General Mortgage Club, said it is still too early to say how the surcharge will affect the sector.
“As such, it is crucial that the Chancellor’s amends are allowed to bed-in before any further action is even considered, whether that be by the Government or regulatory bodies.”
He said the Prudential Regulation Authority’s consultation paper on revised underwriting standards for buy-to-let could backfire. “Too many layers of intervention like this could actually inhibit the market.”
Duncombe added: “The buy-to-let sector as a whole has come under increased scrutiny recently, with many looking to blame landlords for the upwards pressure on house prices.
“However, only around 30% of buy-to-let properties are funded by a mortgage, and 60% of lending volume is actually made up of remortgages.
“Any lending restrictions imposed will therefore only be impacting a small percentage of this market.”