Landlords and agents were scrambling to complete last-minute purchases of second home and buy-to-let properties today ahead of stamp duty hike which comes into effect at midnight.
George Osborne's clampdown on buy-to-let properties was announced in November's Autumn Statement as part of a raft measures designed to tackle the housing crisis and help more first-time buyers on the property ladder.
The three per cent surcharge on top of the stamp duty rate means landlords buying a property for £275,000 will now pay £8,250 in tax compared with £3,750 previously.
|House price band||Previous SDLT rate||New SDLT rate|
|£0 – £125k||
|£125k – £250k||2%||5%|
|£250k – £925k||5%||8%|
|£925k – £1.5m||10%||13%|
Martyn Baum, the president of the National Association of Estate Agents (NAEA), said agents and conveyancers were working up to the wire yesterday afternoon to complete on deals before the banks shut for the day.
"It has been a crazy busy day for estate agents. We have had a huge amount of people trying to hit this deadline and it's been a bit of a crescendo. We really didn't have the finer details until the Budget came along, and since then people have been working hard to get this bottle neck through."
Baum added that transactions taking placing were not only to second home buyers and buy-to-let investors but also to people buying as part of a chain.
With added pressure from buy-to-let investors, research from the NAEA shows that demand for housing reached its highest level for 12 years in February, with an average 463 house hunters registered per member branch.
"Around 85 per cent our members have seen an increase in buy-to-let landlords coming into the market to try and beat deadline last month," Baum said.
The surcharge is one of number of policies introduced by Osborne to cool the buy-to-let market, including the removal of higher rate tax relief for mortgage interest payments and strict new rules announced by the Bank of England earlier this week for banks underwriting buy-to-let mortgage contracts.
Lobby groups and buy-to-let investors have reacted furiously to the changes, which they claim will harm tenants rather than landlords by pushing rents higher and lead to a drop in transactions in the coming months.
David Cox, managing director, of the Association of Residential Letting Agents (ARLA) said: “We’re about to see supply nose-dive, demand sky-rocket and rent prices go through the roof. The introduction of the new stamp duty charges as of Monday is set to push the private rental sector into a state of despair.
However others were more optimistic. Charles Holland, head of residential development and investment at Marsh & Parsons said: A minority of short-term investors – perhaps those thinking of buying a second home both for rental and personal use – may be deterred by the changes – just like a few were warded off when the Chancellor reformed landlord tax relief and the wear-and-tear allowance."
"However, longer-term, repeat investors, who understand the London market and the rewards it can offer with a bit of patience, will view this as a blip, rather than a bombshell, on an otherwise positive buy-to-let radar.”
George Franks, Head of Sales at Douglas & Gordon: “ Over the last few months there has been a surge in the number of enquiries and completions coming through our offices, but we don’t see this as a general representation. Investors and individuals who take a longer-term view are already accounting for the changes as they intend to start or grow their portfolios well after the deadline.”