London housing
Buy-to-let investors will have to pay an additional 3% levy on top of stamp duty when they purchase properties from April 1, 2016 Reuters

Lettings agents are reporting a spike in interest from buy-to-let investors ahead of Chancellor George Osborne's planned tax hike on the sector in April 2016. The Association of Residential Letting Agents (Arla) said in its December survey of members there was a 24% jump in interest from buy-to-let investors.

It follows several reports of an upsurge in buy-to-let activity after the chancellor unveiled in his autumn statement an extra 3% levy on top of normal stamp duty rates for purchases of additional property. Ahead of the new tax year, when the changes will take effect, buy-to-let investors are rushing to complete purchases and dodge the new tax.

Arla's survey also found 62% of letting agents think rents will rise because of Osborne's tax rise, and 65% believe it will hinder new supply of private rental homes by deterring new landlords from entering the market.

"With supply, demand and the number of agents reporting rent increases all declining in December, this could well be the calm before the buy-to-let storm," said David Cox, managing director of Arla. "Buy-to-let landlords determined to complete purchases before the changes come into force in April are storming the UK housing market, meaning the lull we'd usually see is less significant. But subsequently, after April, we're very likely to see the number of buy-to-let properties on the market begin to decrease, and this will most certainly have a detrimental effect on renters across the country."

The Royal Institution of Chartered Surveyors (Rics) said housing demand was propelled in an "unusually buoyant" December for the property market amid a frenzy of last-minute activity by buy-to-let investors. Demand hit a three-month high, said Rics in its monthly UK residential market survey of members. A net balance of 16% of surveyors reported a rise in demand from new buyers during the month, up sharply from 6% in November.

The Council of Mortgage Lenders (CML) reported a 35% annual leap in gross buy-to-let lending in November 2015, when 23,300 mortgages were issued. The CML said the value of gross buy-to-let lending jumped 46% year-on-year in November to £3.5bn. Of this, £1.3bn was for house purchases, a 30% increase, and £2.1bn was for remortgages, up 61.5% as the prospect of an interest rate hike by the Bank of England draws nearer.

Osborne said his stamp duty changes will raise an extra £1bn for the Treasury by 2021, some of which will go on housebuilding and regeneration of local communities. The government wants to increase the home ownership rate and has a number of schemes to help first-time buyers onto the market. "The funds we raise will help building the new homes," Osborne said. "So this Spending Review delivers a doubling of the housing budget; 400,000 new homes, with extra support for London; estates regenerated; Right to Buy rolled-out. Paid for by a tax on buy-to-lets and second homes, delivered by a government committed to helping working people who want to buy their own home. For we are the builders."