Sales of property in the UK have been rising slowly over the last few months, in part because of the number of landlords looking to add to their buy-to-let portfolio before new buy-to-let stamp duty tax rises came into force on 1 April. However, the Royal Institution of Chartered Surveyors (RICS) has released the latest edition of its monthly survey report, and in it said that it expects the housing market to slow down over the next three months once the buy-to-let rush is over.
In the report, RICS revealed that house price inflation peaked in December 2015 as many landlords looked to add to their buy-to-let portfolio. The report continued by saying that once the 3% surcharge on additional homes comes into force, there will likely only be modest growth in the property market. In the report, RICS also said that while house price inflation peaked in December following George Osborne’s Autumn Statement, they do not expect house prices to increase significantly over the next few months.
Along with the number of sales, the RICS survey also revealed that house prices continued to increase in February across the UK, with East Anglia reporting the highest price growth. In contrast, the North East and London experienced very modest gains in February, while the South West recorded the biggest rise in property sales across the United Kingdom. In addition, the RICS survey found that the South West recorded the largest increase in new property instructions anywhere in the country, while new buyer enquiries in the region rose for the twelfth month straight.
As of 1 April 2016, anyone buying an additional property, whether to live in as a holiday home or to rent out to tenants, will have to pay an extra 3% on the current stamp duty tax rate they’d have to pay if they were just purchasing one home. The current stamp duty rates are as follows:
Looking at the numbers above, it’s easy to understand why many landlords are unhappy with George Osborne’s buy-to-let stamp duty changes and have been buying property before the new regulations came into force on 1 April. Any landlord purchasing an additional property at the current average price for a UK Home (£196,999) will now face a stamp duty tax charge of 5% - nearly £10,000!
Speaking at the end of the RICS report, Simon Rubinsohn, Chief Economist at RICS said that the surge in buy-to-let activity over the last three months is down to the changes in stamp duty tax. He continued to say that is inevitable that sales in the property market will decline following the launch of new stamp duty taxes because investors will be less interested in purchasing buy-to-let property if they’re going to face large tax bills.
Have you purchased a new buy-to-let home in Cardiff? If so, as an letting and estate agency in Cardiff, CPS Homes can help source you the best tenants, prepare for the upcoming Rent Smart Wales landlord registration and licensing scheme, and ensure you achieve the best possible return on your investment. To find out more, speak with one of our lettings and sales teams today, either by calling 02920 668585, emailing email@example.com or visiting our office on Woodville Road in Cathays.