Majority of BTL lenders can’t make stamp duty deadline

  • 3 months ago
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Majority of BTL lenders can’t make stamp duty deadline

With the stamp duty deadline drawing closer, newly released data has revealed that over half of BTL lenders currently active in the market are incapable of getting a deal done before time runs out.

Specialist buy-to-let broker, Mortgages for Business, is warning landlords that only 47% of the BTL lenders who are actively lending at the moment could still make the deadline.

And the broker says even the lenders still capable of doing deals in this sort of time frame may well struggle to hit the deadline if solicitors or local authorities drag their feet.

Last July, Rishi Sunak raised the initial stamp duty threshold from £125,000 to £500,000. The move was designed to boost the economy amid the coronavirus pandemic and stimulate the housing market following the first lockdown. The “stamp duty holiday” – which has helped drive up the number of transactions to the extent that the extra business has swamped some lenders – is due to finish on the 31st of March.

Jeni Browne, director of Mortgages for Business, comments: “Typically, a landlord would want about 100 days to complete a purchase. Clearly, landlords don’t have that sort of time on their hands any more and I’d urge them to do everything they can to push through a new buy-to-let purchase before the stamp duty holiday ends.

“Top of their priority list should be picking the right lender. If landlords go to the wrong one, their transaction is bound to take too long. That could leave them either out of pocket or, in certain circumstances, unable to continue with the purchase if they don’t have the funds to pay stamp duty as well as the buy-to-let surcharge.”

While the “stamp duty holiday” means landlords don’t have to pay stamp duty on transactions under £500,000, they must still pay the three per cent buy-to-let surcharge. On a £500,000 buy-to-let purchase, the £30,000 tax bill would be cut in half.

Jeni Browne said: “This is, potentially, a big saving for landlords and that’s one of the reasons that the Chancellor’s temporary relief on Stamp Duty has fueled a mini-boom in the housing market. As a result, I think most landlords would be completely gutted to miss the deadline simply because the lender they’d chosen couldn’t turn their transaction around in time. With volumes so high, many lender’s service levels have slipped – it’s taking some of the big players 10 minutes just to pick up a sales call while others are taking 35 working days just to undertake their processing.

“It’s therefore absolutely critical that landlords speak to a specialist broker who can ensure they not only get a competitive deal but that they also get one that has a realistic chance of going through before the deadline runs out. Frankly, it’s absolutely to the wire, even with the right lender. Surveyors can’t operate at full capacity given all the preparation for a valuation they have to undertake to be Covid-19 compliant and that’s slowing transactions.

“Even if the lenders and the surveyors come through, you might get unlucky with your local authority – one search we undertook recently, took up to 145 days to complete.”

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