Tax change sees mortgage drop-off

Scotland was the only region to increase its mortgage sales in March, while Northern Ireland saw the steepest fall, down by almost 20 per cent.

London followed, with a drop of almost 10 per cent in mortgage sales month-on-month.

Data released from market intelligence consultancy Equifax Touchstone revealed that buy-to-let mortgage sales fell by 26.2 per cent across the UK - equivalent to over £1 billion – during March.

The figures also showed that the drop off in Scotland was the second highest in the UK, falling behind the north west of England.

Meanwhile, Northern Ireland was the only region to report mortgage sales growth last month, with a 2.7 per cent increase, with overall sales falling in all other regional areas.

The slowdown in lending has come about after a rush to buy property between January and February before the introduction of a three per cent Land and Buildings Transaction Tax (LBTT) surcharge on buy-to-let property on 1 April.

Buy-to-let sales have dropped by one third from February’s high point as the new LBTT rates take their toll on the market.

The data from Equifax Touchstone, which covers 92 per cent of the intermediated lending market, shows that the average value of a residential mortgage in April was £191,828, and £159,185 for buy-to-let.

Iain Hill, Relationship Manager at Equifax Touchstone, said: “The slump in buy-to-let mortgage sales comes as no surprise given the recent changes in stamp duty, but it will be interesting to see how providers respond.

“The FCA this week highlighted the need for further improvements in mortgage competition, and the importance of catering for older consumers. We’ve already seen a number of interesting products come to market in recent months, including 100 per cent mortgages and intergenerational offerings. We expect this drive in innovation to continue.”

He added: “The big question from here is, to what extent will the new stamp duty rates discourage investors from entering into new deals? With so much economic uncertainty, property remains an attractive investment option for many people.

“Given the rollercoaster first quarter of 2016, it will be interesting to see where sales trends go from here.”