Stamp duty rise deadline caused 'bottleneck' of sales to buy-to-let investors
Property sales to buy-to-let investors went "right up to the wire" as a bottleneck of buyers rushed to beat a stamp duty hike , estate agents said.
People buying second homes, including buy-to-let investors, will now pay three percentage points above previous rates.
Martyn Baum, president of the National Association of Estate Agents (NAEA) said a rush of investors was seen across the country ahead of the tax hike on Friday.
Mr Baum said: "We have certainly seen huge pressure and demand to try to get deals done in the last week and it has come to a bottleneck. Estate agents and conveyancers have been trying to get deals through and extending their working hours. It has been a busy few days."
Mr Baum, who is based in Leicestershire, expects to see a period of readjustment in the housing market as the stamp duty hike takes hold, with bigger, more commercially-minded landlords still wanting to invest.
He said: "It's becoming more difficult and less appealing to be a landlord, but I do think that will give space and elbow room for first-time buyers. Mortgage rates are currently very attractive."
David Brown, CEO of estate agent Marsh and Parsons, said property sales went "right up to the wire", with over four times the number normally handled.
He said: "In only three days, we've exchanged more than two-and-a-half times the number of properties we would during a typical full working week. That means from Tuesday through to Thursday, we've handled more than quadruple the number of daily exchanges we'd usually expect.
"The April 1 deadline has definitely driven this spike, and exchanges were happening right up to the wire last night.
"We had solicitors working until midnight yesterday to push paperwork through in time."
The new rates of stamp duty land tax (SDLT) apply to purchases of additional residential properties in England, Wales and Northern Ireland.
In the recent Budget, the Government confirmed that big investors will not escape the stamp duty hike.
However, people who temporarily end up with two properties due to difficult circumstances, such as retirees downsizing into a smaller property but struggling to sell their original home, will be given some extra breathing space from the new stamp duty rate.
The Government decided purchasers will have 36 months rather than the originally proposed 18 months to claim a stamp duty refund, in the event that there is a period of overlap or a gap in ownership of a main residence.
In Scotland, SDLT has been replaced by the land and buildings transaction tax.
A hike in this tax has also come into force in Scotland on the purchase of additional homes such as second homes or buy-to-let properties, with the aim of avoiding any potential distortions to the housing market in Scotland that could have come from the stamp duty hike for investors in the rest of the UK.
Landlords are also facing a financial squeeze due to restrictions on their tax breaks.
And earlier this week, the Bank of England unveiled proposals to crack down on buy-to-let lending. The Bank wants lenders to consider landlords' wider finances and not just their rental income. The proposals are being consulted on and if adopted, they could cut new approvals for buy-to-let mortgages by about 10% to 20% by the third quarter of 2018.
The Government has also indicated it will hand the Bank greater powers to intervene in the buy-to-let mortgage market by the end of the year amid concerns of a "bubble" emerging in this market.
The Association of Residential Letting Agents (Arla) found nearly two-thirds (63%) of letting agents predict the supply of buy-to-let properties will now fall as landlords are pushed out of the market.
Nearly six in 10 (57%) Arla members believe rents will be pushed up, as increased costs for landlords are passed through to tenants. This is particularly high in London, where three-quarters (73%) of letting agents expect to see this happening.