The stamp duty holiday for first time buyers looking to purchase a house worth between £125,000 and £250,000 ended on Saturday. Though this is unlikely to impact upon landlords directly – as few landlords are first time buyers – there is definitely going to be a shift in the market.
What Effect did the Holiday Have?
According to a study by Halifax, one in four first time buyers benefitted from the tax waiver and certainly some of these buyers would have not been able to get on to the property ladder at all without the stamp duty holiday. Even though the tax has now resumed at a level of 1%, this still represents an additional cost of well over £1000 and with many buyers struggling to put together deposits, this is a massive obstacle.
What Will we See Now?
The market for first time buyers is going to become just a little bit stickier and the tax will certainly deter buyers who are struggling to get a mortgage. We will have seen, also, a relatively large number of first time buyers push their purchases through to take advantage of the stamp duty holiday; this will mean there are fewer first time buyers shopping around now.
What Does this Mean for Me?
As a landlord, young tenants who are not yet able to buy their own property outright are a good and steady source of income. As it’s going to be even more difficult to get on the property ladder from now on, there should be an increase in the number of tenants who need to let. Equally, market conditions are still tough and many buyers are struggling to afford mortgages. Beware of tenants who have been in previous financial difficulty and always take out Rent Guarantee Insurance to ensure you are fully covered.
With the stamp duty holiday over, the market won’t get any easier for first time buyers and that is only likely to continue pushing up demand, and rental prices, in the private buy-to-let sector. Always look out for tenants who have had problems paying in the past and beware if your tenants are thinking of purchasing something themselves – it almost certainly means they’ll be moving out.