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Buy-to-let bounces back and first-time buyer market thrives after Brexit

Written by: Christina Hoghton
The buy-to-let mortgage market surged in August, while first-time buyer and remortgage lending continues to thrive despite earlier sector fears.

Buy-to-let activity rocketed 12.7% in August, according to Connells Survey and Valuation, as the sector successfully absorbed the government’s 2015 policy changes.

Changes to the tax treatment of the buy-to-let sector and the second home Stamp Duty premium looked to be choking off activity in 2015 and early 2016, but the August rebound suggests that this was a short-term problem.

John Bagshaw, corporate services director of Connells Survey and Valuation, said: “Now the effects of the government’s legislation have been digested by lenders and investors alike, buy-to-let activity has increased sharply. The market’s fears over the impact of Brexit are calming too and the Bank of England’s decision to cut the Base Rate last month for the first time in seven years may also have a psychological impact on property investors.

“While we can still see the impact of the last government’s damaging set of changes to legislation in the year-on-year numbers, August’s surge in activity highlights the resilience of the buy-to-let sector.”

First-time buyer boost

First-time buyer activity saw the biggest overall increase in valuations, driving August’s housing market, with valuations up by 6.8% on July and by 19.6% on an annual basis.

Remortgaging activity also saw an increase in valuations on both a monthly and an annual basis. On a monthly basis, remortgaging valuations saw a growth of 4.2% and a 1.5% increase year-on-year to August 2016.

Bagshaw added: “First-time buyers have enjoyed a month of growth and the sector is continuing to thrive following a strong July – given first time buyers are the engine of the property market, this is very significant. August has also seen a surge in activity in the remortgaging sector, partially fuelled by the interest rate.”

Across all sections of the housing market, overall valuation activity has risen by 5.1% on a monthly basis, between July and August. On an annual basis, there was also a slight increase of 0.2% more valuations carried out than in August 2015.

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