The surge of buy-to-let investors aiming to purchase property before the increase in Stamp Duty was introduced on 1st April lead to record numbers of transactions in the first quarter of 2016.
Both the numbers of offers and completed sales increased markedly during the opening three months of the year.
In fact, over the last two years, buy-to-let activity has soared, outperforming all other asset classes. Total annual returns from buy-to-let properties reached 12% during 2015. In absolute terms, this totalled £21,988.
Onlookers are pessimistic on whether buy-to-let demand will continue at such a pace, given the alterations to Stamp Duty, new lending rules and spiralling property prices.
The Bank of England notes there is a ‘risk that many landlords did not fully appreciate the implications,’ of cuts to mortgage interest tax relief coming from April 2017.
In its agents’ summary of business conditions, the Bank states:, ‘that could lead to downside risks to activity in the sector further out, if it subsequently led landlords to make a sharper adjustment to their portfolios.’
If you are an existing or would-be buy-to-let landlord, you should not be deterred by the increases in Stamp Duty Land Tax. A recent report has revealed that for eight out ten regions in the UK, property price inflation will negate the impact of the increased levy within just one year.
What’s more, rental demand is showing no signs of abating. This means by following the correct procedures and having a solid idea of what tenants you want to attract, your property will not be empty for long. This also means that you will not have to claim on your unoccupied property insurance, should any problems occur.
The impact of Stamp Duty Land Tax however must be taken into account, to ensure that you correctly budget and maximise your rental returns!