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Stamp duty – likely to dampen Shropshire’s buy to let market

Three per cent stamp duty on second homes, announced in the Autumn budget, will hold back the buy to let market and may impact on buy to let property value, reducing the prices.

Shropshire estate agent, Tim Main of Balfours, says that the move is the second significant blow for buy to let investors this year.

He says: “The reality is that stamp duty on a £150,000 property will be hiked up significantly after April 2016, from £500 to £3,800. This is the second financial hit for buy-to-let investors this year. The summer budget in July reduced landlords’ ability to offset mortgage interest costs against rental income. That change will be phased in between 2017 and 2020 and make many existing buy-to-lets unprofitable.”

He continues: “We don’t know full details, for instance what constitutes a second home? However it could well spike the buy to let market in the next few months, before the April 2016 deadline. That will initially step up the competition for first time buyers, but ultimately first time buyers are unlikely to face as much competition as they have experienced in recent years.”

Mr Main is less concerned for the second home, holiday market: “It might dampen enthusiasm and marginally reduced spend, but generally if people want, and can afford, a holiday home they will buy anyway.  On a £350,000 second home there will be an £9,300 extra stamp duty to pay taking the bill to £16,800; for a £450,000 property the stamp duty bill will be just short of £25,000 – which is nearly double the current cost.

“We have experienced a good year with SY1, 2 and 3 property values averaging 5% up, overall Shropshire property prices are very settled which is good for confidence, however house supply has been less predictable – perhaps yesterday’s announcement will encourage home owners considering a sale to progress pre April 2016.”

 

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