Independent UK mortgage lenders will not be as affected by the government’s new 3% stamp duty surcharge for buy-to-let properties as the big banks, according to Shore Capital.
On Wednesday, the Chancellor introduced the policy in his Autumn Statement, and in the short term, lenders could see a spike in demand for mortgages from landlords looking to get into the market before it comes into effect next year.
“In the near-term, we expect that these policy measures may continue to drive strong demand for buy-to-let mortgages, continuing the recent trend, as landlords look to ‘get in early’ before the new policy measures are enacted,” Shore Capital said.
After this, the broker continues, it is possible that demand for buy-to-let mortgages could be dampened.
It is the “second kick in the teeth” for landlords, following the proposed removal of higher rate income tax relief on buy-to-let mortgage interest payments that were announced in the UK Summer Budget, though this will not take effect for six years.
Turning to the lenders with exposure to the buy-to-let sector, around half of lending is related to re-mortgaging, which would not be impacted by the stamp duty surcharge.
Also exempt are landlords with more than 15 properties who run their buy-to-let business as a business.
Shore Capital said: “This kind of borrower is a relatively high proportion of the customer base for the specialist lenders such as Paragon (LON:PAG), OneSavings Bank (LON:OAB), Aldermore (LON:ALD) and Shawbrook (LON:SHAW), when compared to the mainstream lenders like Virgin Money (LON:VM.) and Lloyds (LON:LLOY).”