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Stamp Duty hike will shift market in favour of professional landlords

  • 03/12/2015
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Stamp Duty hike will shift market in favour of professional landlords
An increase in Stamp Duty for landlords will prompt a gradual shift to more professional landlords investing in the buy-to-let market, commentators say.

According to a poll carried out by Mortgage Solutions, 63% of readers believe the 3% rise in Stamp Duty Land Tax for second homes will see investors rushing frantically to get completions in before the implementation on 1 April.

Just over a quarter of mortgage professionals do not believe a buying frenzy is likely, while 10% are still undecided on what the impact will be prior to April.

But Alan Cleary, managing director of Precise Mortgages, said the market should not assume that there will be a massive spike in business in the first quarter of 2015.

“60% of buy-to-let gross lending is remortgaging and this is unaffected by Stamp Duty Land Tax. I think the bigger, professional landlords will take the changes in their stride, while speculators may make a dash to get purchases through the door,” he said.

“After April I think it’s likely we’ll see less speculators in the market leading to a gradual shift in favour of professional landlords with multiple properties. The changes to mortgage interest relief are more likely to have an impact, but this will be a gradual reduction from 2017 to 2020.”

Further findings published by Kent Reliance showed that buy-to-let lending to limited companies doubled to 5,000 per month, following the Chancellor’s Budget announcement in July that mortgage interest tax relief would be cut to the basic rate of 20% for landlords from 2017.

However, Ying Tan, managing director of The Buy to Let Business, said it was inevitable that there will be a ‘mad rush’ of people in the first quarter.

“I almost feel that within the next four to six months you’ll see nine to 10 months’ worth of business coming through, which I think is what we need as there will be an inevitable lull after the changes come in. We’re certainly seeing people compelled to make a decision now rather than remaining on the fence on whether to invest or not,” Tan added.

“It’s going to be a challenge but there may be a silver lining in that at the end of day. Prospective buyers will calculate whether they are able to afford the investment and prices may well fall a bit as a result of higher Stamp Duty, certainly in the South East and London. It is a concern immediately post-April but once landlords adjust to the changes they will factor that into their calculations and an equilibrium will be found on the pricing.”

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