Investors Are Poised To Seize The Market
The stamp duty holiday is welcome news for the UK’s buy-to-let industry.
There has been keen coverage of the UK property market since it reopened for business in mid-May. Significant speculation has been offered about every aspect of the industry – from the impact of pent-up buyer demand to the increase in virtual viewings to support market movement during the pandemic. As the sales figures come in, the opinion is that the property sector will recover from this slump and avoid an absolute crash. With the introduction of a stamp duty holiday, announced by Chancellor Rishi Sunak, now is the time for buy-to-let landlords to get in on the action and expand their property portfolios.
How Much Is The Stamp Duty Holiday Worth?
Conveyancers Hook & Partners explain that anyone buying a property to be used as their main residence, with a value of up to £500,000, will not pay any stamp duty on the purchase. Those looking at properties worth up to £925,000 will pay 5% tax for the portion over the threshold. Buy-to-let landlords can also take advantage of this deal, but they’ll still need to pay the additional 3% surcharge for purchasing properties on a second home or buy-to-let basis. For anyone purchasing a property worth £500,000 or more, the temporary change to rates means that you can expect to save as much as £15,000 off your bill.
Time Is Ticking
The stamp duty holiday is applicable from the 8th July to the 31st March, 2021, which provides a reasonably narrow window for investors to find new properties to add to their portfolios. The impact of the stamp duty holiday is likely to benefit both sellers as well as buyers. It is probable that vendors now will be able to increase their asking price slightly to accommodate the fact that buyers will be losing stamp duty from their list of fees to pay. If property investors want to take advantage of this incentive, then it’s important that they get in there before the second steppers, so as to snap up the best deals in the market.
One clear advantage that buy-to-let landlords have over residential owner occupiers is that they’re more likely to have access to a larger deposit. At the moment, lenders are favouring buyers who have more security to offer them. Buy-to-let landlords are able to remortgage properties within their portfolio so as to pick up bargains lying elsewhere in the market. In fact, analysis suggests that many have been preparing since the beginning of lockdown to get themselves in the best financial position to proceed. Mortgages for Business reveals that 46% of landlords spent April and May increasing the size of their loans in preparation for a slump in the market. This is in comparison to a long-term average of 38% who behave in the same way.
Unfortunately, first-time buyers and current owner occupiers have not been able, or have not had the foresight to ready themselves in the same way. This puts your average property investor in an incredibly strong position to seize the market and gets things moving once again.