Buy-to-let valuation instructions have dropped like a stone since the Stamp Duty surcharge kicked in on second properties – and there are signs of a sharp rise in potentially ‘dodgy’ deals.
In March – with the April 1 Stamp Duty deadline too close to make completions viable – instructions plummeted by 30.6% on February.
The fall continued in April, with buy-to-let valuation instructions down 40% when compared with February.
The report is from Landmark Quest.
With a majority of mortgage valuation instructions being handled between lenders and valuation surveyors via Landmark Quest’s technology, it is in a unique position to be able to analyse instruction volumes across the bulk of the mortgage market.
Peter Stimson, managing director of Landmark Quest, said he is anticipating that volumes of buy-to-let instructions will be low this month.
As part of its fraud screening services, Landmark also monitors the property market for potential threats, and following changes to the Stamp Duty rules it is reporting a rapid increase in the number of investment properties now appearing on ‘sale under value’ and ‘property club’ websites.
In particular there are a lot of new-build developments now appearing offering buyer incentives.
Stimson said: “With any significant changes like we have seen with the Stamp Duty rules, we do typically see a change in behaviour.
“Currently, we are seeing a sharp rise in the number of new-build developments either offering ‘Stamp Duty paid’ deals or appearing in property clubs offered at ‘discounted rates’.
“Particularly worrying is that rather than just one or two properties at the end of a development phase, in some instances we are now seeing entire developments appearing for sale ‘under value’.
“Lenders and surveyors really need to do their due diligence and be fully aware of such incentives and schemes to manage and control the risks associated with these.”
The most infamous property club was Inside Track, which collapsed in 2008. An estimated 20,000 signed up to it, paying hefty subscriptions to gain access to properties supposedly at below market value rates.
Comments (2)
I think I need risks associated with the discounts and incentives explained to me. Is the risk that the self fulfilling prophecy cycle between online random number generator valuation systems and rubber stamp, no surveyor will call, mortgage valutaions is broken?
I love it when banks play the victim. Inside Track never sold a property which had not had three mortgage valuations carried out by three different national surveyor companies prior to marketing the product. If surveyors confirmed the headline valuation was correct then Inside Track were quite correct in stating that their clients were buying at a discount to market price.
I agree with Robert May that the valuation process was the issue not the claims of property clubs. Who neither carried out the survey or wrote the mortgages.