Stamp Duty Increase – How Has It Affected Investment Properties?
My Home Move, the UK’s leading provider of mover conveyancing services, has carried out research that shows the number of properties being purchased by property investors has dramatically decreased since the introduction of the Stamp Duty levy for additional home buyers.
The once buoyant investment market has halved in size since 1st April 2016 as additional home buyers and landlords have turned their backs on paying the 3% stamp duty increase charge and sales have slowed.
Doug Crawford, CEO of My Home Move, said, 'The introduction of the Stamp Duty levy is still a controversial move. The government framed the changes to Stamp Duty as being a tax that would affect ‘greedy’ landlords – investors who were in a position to buy multiple properties, potentially taking them away from first-time buyers. However, in reality, people buying additional homes aren’t just landlords with vast portfolios of properties, but parents looking to help their children get on the property ladder or retirees wanting to invest.
'I’d argue that the Government’s new tax has actually affected individuals looking for a second property far more than the career landlord. If anything, the changes have resulted in money being redirected into gifted deposits, particularly for second steppers and middle movers.'
In the months leading up to the Stamp Duty changes, gifted deposits accounted for around 8.4% of all purchase transactions. However, once the law changed, this rose to around 9.3% with ‘second steppers’ and ‘middle movers’ becoming the largest beneficiary group.
'Our research has revealed that while ‘second steppers’ and ‘middle movers’ have always received the greatest number of gifted deposits, after the Stamp Duty change this number increased by 8% over the year,' says Doug. 'The Bank of Mum and Dad has once again had to step-in to help those struggling financially to move beyond their first home – a situation caused by the lack of housing stock and inflated property prices.'