Barclays bank is the first of the big UK lenders to encourage first-time buyers to invest into a buy-to-let scheme. The idea is aimed at those who ‘cannot get onto the property ladder’ in their own area, typically the more southern regions of the country, and means that the property owner will not live in the first property they buy, but will be the owner of the property non-the-less.
Sounds great for the buyer, and increased mortgage agreements can only aid the income of the banking business. But are there other positives too?
A mutual understanding
If it wasn’t profitable, the sad truth is that many banks wouldn’t offer the deals they do to customers. This is pretty much a given, and it is no different in this case.
On top of an increased revenue in the form of mortgages and other loans of the like, offering this option to customers has loopholed the recent Stamp Duty changes. So if the promotion has the potential to increase Revenue for government too, you can be confident that there is a mutual agreement between the two bodies somewhere down the line.
How does the government benefit from this?
For those who aren’t yet aware, the changes in Stamp Duty means that first-time buyers do not pay the tax now for homes valued at £300,000 or less, a jump from the previous limit of £125,000. But how does this tie into buy-to-let?
The conditions of the Stamp Duty tax change only apply if the first-time buyer actually lives in the property they are buying or signing a mortgage agreement for. As this condition is not being met through any buy-to-let scheme aimed at first-time buyers, the original tax will be applied. Meaning that for any property
Is this out to swindle the buyer?
Though it is too early to say earnestly, on the surface this is an option that could be utilised by some.
It is true that government and the banks set to benefit from buy-to-lets, but it does get a first-time buyer on the property ladder, and it does provide this as an option where somebody would not have to move to a cheaper part of the country to do so. Not only this, but it then provides revenue to the buyer in the form of rent, and physical equity if they were to fall on financial struggles down the line.
Time to apply for a buy-to-let?
This is not a decision to be taken lightly, as this does then place the buyer into the legalities of becoming a landlord, presumably also including the financial responsibility and liability for the tenant and property. In some cases it could also result in the buyer not being able to fully undertake a career path, as the time obligated to the buyers landlord responsibilities may overlap any full time occupations.
Could this see a boom in the property market? Could it end up as a future of renting from your neighbours? Let’s see who grabs a rung.
If you are considering buying a Buy-To-Let, then why not compare Home Conveyancing quotes to help you save even more money!