Stamp Duty Changes 2016 – It might become harder to sell your home
As if the cost of moving home is not expensive enough already, the government have introduced an additional 3% stamp duty charge for countless sectors of the market (specifically buy-to-let and holiday homes), this is in addition to the existing stamp duty that all buyers pay.
We like to keep our existing clients and potential clients abreast of developments within the property market. In the recent budget review which took place in November, George Osborne, the current chancellor of the exchequer, took most pundits by surprise by announcing an additional stamp duty surcharge of 3% on all properties bought as second homes, holiday homes or investment properties (buy to let properties) from the 1st of April 2016.
In a nutshell, how will these changes make it harder to sell?
Our current view is that this announcement will have a serious effect on the housing market as a whole. Any new or existing landlords that are considering buying a buy to let property or increasing their portfolio of buy to let homes will certainly want to avoid the additional charges that they will now incur from 1st April.
At this point in time our message is clear, if you are in a property and its value is less than £250,000 it is likely that one of your potential buyers in the future would have been a landlord, this may now be less likely as a result of the changes.
We believe that those buyers who will be affected by these changes will want to move quickly, especially now that the New Year is upon us.Once a property has a sale agreed, it can take quite a few weeks for the matters to be finalised. Therefore we are expecting a flurry of activity at the lower end of the market as landlords and investors look to purchase the properties before this deadline.
As a result of this decision within the marketplace, we believe there will be various implications, most people moving up market invariably need to sell their house to do so. If the marketplace loses its investment buyers, we could see a reduction in sales at the lower end of between 30% and 40%. This will make it much harder for people to move as all property chains invariably have a property at the beginning of the “ladder”.
What if I don’t have a property that would appeal to an investor?
For those of you that have houses that would not appeal potentially to an investor, you will still be affected by these changes as your potential buyer maybe moving up from a house at the lower end of the market and their prospective buyer may well be a potential landlord investor. There will be delays throughout the chain which invariably have a property at the beginning of the “ladder”. Therefore, you should consider bringing your plans for a sale forward as well, especially if you plan to move quickly.
What are the additional costs for buyers affected by these changes?
To give you an indication of the additional costs to those buyers, the purchase of a property at £200,000 by a non-residential purchaser will now incur that purchaser an additional cost of £6000. Even a purchase of a property at £150,000 will incur anon-residential purchaser an additional cost of £4500.
Our views on the Stamp Duty changes
Our personal view is that these changes could really have a negative impact both on the sales market and the private sector rental market.If the number of landlords buying homes reduces, there will be increased pressure on the availability of housing stock for the private rental sector which could have the effect of pushing rents upwards due to lack of supply. If the market as a whole slows down there could be a lack of stock available within the marketplace and the traditional home mover who has always gravitated towards a better and more suitable family property may end up having to pay more for their home in the future.
If you have been considering moving up into a larger home, downsizing or becoming a landlord then we may be able to help you save considerable amounts of money by helping you to take prompt action in the very early part of the New Year.
At Edison Ford we consider ourselves to be property experts and can provide advice for anyone involved in the property market and any residential owner looking to move in the New Year. If you are concerned about the implications of these changes, would like help and/or advice, then please feel free to call us on 01454 316718 or drop into our office on Station Road in Yate.