Homebuyers and investors alike were taken by surprise when Chancellor of the Exchequer Rishi Sunak announced that a stamp duty ‘holiday’ would run from 8 July 2020 to 31 March 2021 as part of his summer statement. During that time, no stamp duty will be levied on the first £500,000 of all property sales in England and Northern Ireland.
The change means that buy-to-let investors will have to pay just 3% stamp duty if they buy a property for £500,000 or less (this 3% being the second home surcharge that was already in place and which remains in place during the stamp duty holiday period).
The chance to make a saving of up to £15,000 is spurring many existing and would-be landlords into action. At Fabrik Invest, we’re seen increased traffic as a result of the Chancellor’s announcement, with investors keen to benefit from the potential saving. At the same time, one of our developer partners recorded an increase in sales activity of over 50%. Clearly, the stamp duty holiday is spurring a spike in demand for buy-to-let accommodation.
The taxation holiday is a move that many property companies support. The industry has been calling for a stamp duty shakeup for some time to encourage people to buy, with organisations such as the Royal Institute for Chartered Surveyors and the National Federation for Builders speaking out on the matter.
“The Chancellor has responded to lobbying by key players in the property industry by introducing a stamp duty holiday until March 2021. Intended to support the housing market to weather the impact of COIVD-19, the move will provide a boost for investors as well as owner-occupiers, leading many to take advantage of the significant savings that are currently available.”
Dale Anderson, Managing Director, Fabrik Invest
In every UK city, the price of the average property falls below the new £500,000 stamp duty threshold, according to the hometrack UK House Price Index for May 2020. Indeed, in investment hotspots such as Liverpool, Manchester and Birmingham, the average property is priced at well under £200,000. This means that even higher end investment properties can be snapped up without incurring any stamp duty beyond the 3% levy that all buy-to-let investors must pay.
Many investors have been quietly preparing to take advantage of just such a situation, anticipating that the time would come when they would need to move quickly.
“We know property investors have been remortgaging with a view to picking up some bargains. Owner occupiers have not been doing the same. Landlords have been preparing since the start of the lockdown, remortgaging to enlarge potential war chests with an eye on bagging bargains in the future.”
Steve Olejnik, Managing Director, Mortgages for Business
According to Really Moving, the time to act is very much now. The company’s research has led it to project a 1.4% dip in house prices in August, followed by a rebound of 4.7% in September. If the figures play out, there is a window for investors to buy during the dip and then quickly see their capital appreciate over the following weeks, as well as for them to save on the cost of stamp duty.
Given all of this, it is no wonder that many buy-to-let investors are choosing now to add to their portfolios. If you are one of them, why not get in touch with the Fabrik Invest team? You can call us on 020 8175 9891, email firstname.lastname@example.org or visit www.fabrikinvest.com.