Before the Stamp Duty hike in April
Agents are reporting a surge in enquiries from existing and aspiring property investors to beat the Stamp Duty Land Tax (SDLT) increase for second homes and buy-to-let properties, which will be enforced from April 2016.
Are you a hopeful landlord keen to secure additions to your portfolio before having to cover the extra 3% on purchase?
Time is of the essence
With the clock ticking before 3% SDLT will be added to buy-to-let and second home property purchases, landlords have been surging the market in attempts to add to their property investment portfolio.
Since the announcement by George Osborne in November 2015, the Association of Residential Letting Agents (ARLA) reports that a quarter of estate agents are seeing an increase in their enquiries from investors keen to secure a deal before April 2016.
The decision by the government was introduced to effectively put a dampener on the sizzling buy-to-let property market that has been appealing to landlords in recent years due to record low interest rates and a shortage of properties.
In 2015, buy-to-let mortgages were approximately a quarter of all mortgages arranged, according to figures by Reuters. Many of these are small investors who own and manage a handful of properties, usually as part of a retirement plan.
Figures show that almost 20 percent of UK homes are owned by a total of 2 million private landlords.
Buy-to-let market continues to rise
Despite other announcements related to restrictions to tax relief and a tightening to the buy-to-let mortgage lending criteria, the additional SDLT deadline is currently spurring people into action.
RICS, The Royal Institution of Chartered Surveyors, last month, announced a three-month high in rental property purchases.
They are also predicting a further “heating up” of the housing market as a whole, before April 2016, which is also likely to drive property prices even further upwards.
“A further heating up of the housing market is likely before April” Simon Rubinsohn, RICS’s chief economist.
How much is there to save?
In some cases property investors will have to pay three times the amount of SDLT following April 2016 and considerable savings can be made across the board, but particularly for homes above or around £250,000.
Property Value | Tax rate | SDLT amount | Second home / Buy-to-let | Total SDLT | Saving from acting before April 16 |
---|---|---|---|---|---|
£0 - £125,000 | 0% | £0 | +3% | up to £3,750 | up to £3,750 |
£125,001 - £250,000 | 2% | £2,500 - £5,000 | +3% | £6,250 - £12,500 | from £3,750 - £7500 |
250,001+ | 5% | 12,500+ | +3% | £20,000+ | from £7,500 |
It is essential to act soon though, as mortgages can take a matter of weeks, sometimes months if they are complex, to secure.
Working with a specialist mortgage adviser, who knows the best lenders for buy-to-let mortgages, could help speed the process along.
Dental & Medical Financial Services can help arrange a competitive buy-to-let mortgage. Act soon though as time is ticking. Call Chris today to get an initial quote.
Tel: 01403 780 770