Property Week: Auction market braced for rush before stamp duty rise
Fri 04 Dec 2015
The auction market could see a rush of purchases from buy-to-let investors ahead of stamp duty increases nextApril - but sales could dip after that, warn experts.
In last weeks Autumn Statement, Chancellor George Osborne announced that stamp duty on buy-to-let andsecond homes would increase by 3%. While the changes will not affect corporate landlords or private individualsbuying properties for sole residence, buy-to-let investors would have to pay an average of 10,000 more thanothers for a property, estimated Andrew Binstock, auctioneer at Auction House London.
He predicted a flurry of activity ahead of the deadline as sellers sought to capitalise on heightened demand frombuyers. We may see a flood of properties hit the sales rooms in the coming months, in order to beat thedeadline, he said.
He added that although investors would like the fact they dont have to compete against so many privateindividuals, sales were likely to slow after 1 April. It will be harder to fill auction rooms to the capacity levels weare used to, he said.
Laith Khalaf, senior analyst at Hargreaves Lansdown, added that in the long term the policy would makebuy-to-let less attractive as an investment proposition, and probably mean more people consider pensions andISAs.
The move would also have an immediate impact on the lending market for private investors, said Peter Rollings,chief executive of London estate agent Marsh & Parsons, who predicted a winter flurry of buy-to-let borrowing.
The question as we enter the new year is whether the supply of homes will match the increasing demand thatsclearly evident, he said.
Gary Bailey, sales director at loan provider Together, said private investors could be driven toward commercialproperty. We could see a rise in demand for semi-commercial properties, since this latest levy is specifically forresidential, he said. Keen property investors will look at the alternatives or will simply build these new costs intotheir model.