Buy-to-let investors are looking to get in ahead of the new stamp duty rules coming into play in April.
The predicted surge in activity from investors in rental properties in the UK ahead of the new rules about second-home investment is already starting to take shape, according to new reports, which have shown that many landlords looking to expand their portfolios were doing so around the turn of the year to give themselves the chance to sidestep the new charges.
In November, the chancellor George Osborne announced that those buying second homes in the UK, which includes buy-to-let purchases, will face a three per cent levy on stamp duty charges, which many feared would mean a drop in available homes to rent.
The move was designed to inject some £3.8 billion per year into the economy by taking advantage of the strength of the British private rental sector. But with investment in a £250,000 property set to see investors have to pay £10,000 in tax from April rather than £2,500 at present, it’s easy to see why many were unsure about putting money into the market after the new rules come in.
But data from the Association of Residential Letting Agents (ARLA) suggests that rather than simply turning their backs on the private rented sector entirely from that date, many savvy landlords are instead backing the market, and spending now to save themselves some money in the long run and improve their returns.
According to the organisation, a quarter of all agents across the country have reported a rise in the number of landlords who are now looking to invest more money in buy-to-let since the change was announced. It said a fall in the number of homes coming to market in December could initially have been seen as a vote of no confidence in the rental sector burdened with this new tax, but the fact agents are seeing more landlord demand implies a simple regrouping as investors decided whether it was best to spend before the regulations change or not.
David Cox, managing director of ARLA, said: “Landlords determined to complete purchases before the changes come into force in April are storming the UK housing market, meaning the lull we’d usually see is less significant.”
This data from ARLA has also been backed up by the Royal Institute of Chartered Surveyors, which reported a quick rise in buyer sentiment as of the end of last year. It said that in December, there was a sharp rise in the number of surveyors reporting a growing level of demand when compared to November, suggesting a swelling of purchasing intentions from landlords in that time.
According to him: It has been speculating that it’s the consequence of the chancellor’s announcement last month. The potential investors would like to pick up homes before the stamp duty levy. In that case we could expect the heating up of the housing market further over the next months.
This article has been provided by Experience Invest.