Posted on 23.3.16 by Sobiah Khan
Recent property figures show a huge rise in buy-to-let activity with some figures at their highest point since January 2009. Many buy-to-let investors are making the most of the market before the changes to Stamp Duty Land Tax on second homes come into force in less than two weeks’ time.
Buy-to-let mortgages in January 2016 compared to January 2015 soared by 22% and the total money borrowed rose by 40% to £1.4 billion. There has been a distinct monthly increase also from January ‘16 to February ‘16 with buy-to-let valuations ramping up by 25%. The rush to get transactions completed is because of the changes that will come into effect on 1st April when an extra 3% surcharge will be put on the purchases of additional residential properties.
The surge in activity could be a reflection of these changes afoot and represent a likely altering of the market come April time.
Budget Double Blow
The Budget announcement last Wednesday dealt more bad news for landlord investors who were excluded from the Capital Gains Tax cut. This tax is paid on profits from asset sales and was cut from 28% to 20% for the higher rate taxpayers and fro 18% to 10% for basic rate taxpayers. However, buy-to-let landlords will not be able to benefit from such tax cuts if they sell their second home/other residential property, which has led many to say that the government is ‘demonising’ these investors yet again.
What next for Buy-to-Let landlords?
Landlords will now have to calculate the impact of the stamp duty hike to see if it still financial viable to invest in and rent out a property. Despite the increases that will come in, the buy-to-let market for many investors will still be an attractive proposition because of the potential returns further down the line.
The following few months may be a ‘cooling off’ period for investors who will reassess before deciding what to do next. In the meantime, we are expecting to see more first-time buyers entering the market and taking advantage of such changes whilst they can.
Let Gorvins help
As a buy-to-let landlord you can rest assure that we will do all we can to help you along the way if you do decide to invest in a second residential property, making your transaction smooth and efficient so you can get renting it out as soon as possible.
To get a conveyancing quote, give us a call on 0343 507 5151. You can also fill in our online contact form and someone will be in touch with you soon.