Surge in by-to-let ahead of surcharge25th April 2016
There has been a considerable uptick in the investment into buy to let property in the run up to the new surcharge rules. Recent figures demonstrate a 35% surge in buyer activity as supply fell by 8%. According to estate agent Haart, there were 15 buyers for every new property that came on the market in January of this year.
On April 6th 2016, any buy-to-let investor will have to pay an additional 3% stamp duty surcharge compared with residential buyers. Higher-rate tax relief on mortgage interest will reduce from April 2017 to the basic 20% rate and landlords will be able to claim less for wear and tear on their properties.
In terms of first-time buyers, there has not been much movement in house prices, which have been up 2.3% month-on-month and up 6.8% for the year. London house prices have also been on the rise, up 0.9 per cent on December and 18.9 per cent for the year.
Investment in the buy-to-let sector is generally seen to be responsible for a large proportion of this rise in anticipation of the stamp duty surcharge. This has come from a substantial backlog of homes in the pre-completion stage. There is a clear shortage of conveyancers and lawyers to complete these sales, which leads to a subsequent decline in the number of completions in January.
Once April comes around and the surcharge comes into play, the number of investors is expected to drop off. However, this change is predicted to help first time buyers and the amount of properties available, as there will be less competition.
In his Autumn Statement on the 25th November 2015, the Chancellor George Osbourne said: “People buying a home to let should not be squeezing out families who can’t afford a home to buy. So I am introducing new rates of stamp duty that will be three per cent higher on the purchase of additional properties like buy to lets and second homes.”
The changes will increase the stamp duty tax on a £275K buy-to-let purchase from £3,750 to £12,000. The changes also apply to property being purchased as a second home.
11th September 2017Read more