Recent banking industry statistics have confirmed predictions of a significant surge in buy-to-let and second-home buying just before the new stamp duty land tax surcharge was introduced in April this year.
The 3% additional charge was announced in last December’s Autumn Statement and applies to all purchases of second homes in England, Wales, and Norther Ireland including residential property for letting. Scotland is introducing a similar surcharge for its land and buildings transactions tax.
The four-month delay before the surcharge came into force gave focused buyers a chance to press ahead with their investment plans and thereby save considerable tax on each purchase.
According to the British Bankers’ Association, gross mortgage borrowing rose sharply in March to reach its highest levels in eight years, as investors brought transactions forward to beat the deadline. Banks and building societies lent over £17 billion in mortgages during the month, a 64% increase on the March 2015 figures. It was the highest amount borrowed for residential property purchases in a single month since the property market peaked in April 2008.