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Mortgage Application Delays For Buy To Let Customers

Will Landlords Complete Before 31st March?

The stamp duty holiday has increased interest in buy to let investments in the UK. But with a surge of BTL mortgage applications, will these all be processed?

With less than two months to go until the government’s stamp duty holiday ends on 31st March, the clock is ticking! This temporary tax relief initiative has been in play since July 2020, introduced by Chancellor Sunak to encourage the property market to stay afloat during the uncertainty of the pandemic. As a hugely successful scheme, buy to let customers have been able to save as much as £15,000 off their tax bill, which is a significant saving when you’re buying an investment property.

The problem now that we’re approaching the deadline, is that there are huge bottlenecks throughout the entire property system. A property solicitors Essex team reports that there are significant delays with local authority searches, which is putting pressure on the system. Unfortunately, for those buy-to-let investors who require a mortgage, the situation is now at breaking point. A leading mortgage broker, Mortgages for Business, reports that more than 50% of lenders in the market will be unable to process their applications and provide finance before the stamp duty deadline.

Choosing The Right Lender

Buy to let landlords would usually require around 100 days to complete a purchase, but there won’t be enough time left to beat the deadline if this is your schedule. With this in mind, it pays to pick the right lender for your mortgage application. With reduced capacity and remote working, some companies have been forced to let their high standards slip, taking 10 minutes to answer a sales call from a new client, and up to 35 days to complete their application processing. Even with the right lender, it’s going to be a close call trying to beat the deadline.

Stamp Duty Debate

The one way to ease this pressure would be if the government was to extend the stamp duty holiday past the 31st March, 2021 or at least honour the saving for those who are already in committed property sales chains. A petition for the SDLT holiday to be extended was signed by more than 100,000 people and will therefore be debated by MPs in parliament to avoid that cliff-edge ending to the tax break.

What Will Happen To Landlords Who Can’t Beat The Deadline?

If your mortgage application, along with local searches and conveyancer enquiries have been in the system for a few weeks already, then you’ll have an increased chance of pulling your property purchase through before the end of March. As we get closer to the deadline, some problems might start to arise, as panic sets in. For buy to let landlords, there is an additional 3% surcharge, rising to 15% for the most expensive properties. If you have counted on not paying basic stamp duty to help you afford the surcharge for the transaction, then you may not be able to complete the purchase if you know you won’t have funds available. Even if you do, be aware that other members of your property chain may pull out due to not being able or willing to pay the stamp duty from the 1st April onwards. This will leave landlords out of pocket for the money already spent on the property.

Although there isn’t much time left to beat the deadline, it’s important to put the time you do have to good use. Keep in communication with your estate agent and conveyancing team, pulling together any necessary paperwork immediately to keep things moving.

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