The chancellor, Rishi Sunak’s, announced a Stamp Duty Land Tax (SDLT) holiday on residential properties on the 8 July, but how is this affecting buy-to-let investors in Southport?
Temporary change to Stamp Duty tier
Before the 8 July, people who bought property in England paid Stamp Duty at the following rates:
Property value SDLT rate
Up to £125,00 Zero
Proportion over £125,000 to £250,000 2%
Proportion over £250,001 to £950,000 5%
Proportion over £950,001 to £1.5 million 10%
Proportion over Above £1.5 million 12%
First-time-buyers did not have to pay any SDLT on properties worth less than £300,000 and buy-to-let investors and second homeowners had to pay an additional 3% on top of each tier.
From the 8 July the zero rate applies to properties up to a value of £500,000.
In a move that surprised many, Mr Sunak chose to include buy-to-let investors and second homeowners in the Stamp Duty holiday. Therefore, on a property worth £250,000 a buy-to-let investor would only pay 3% SDLT rather than an additional 2% on £125,000 of the transaction, a saving of £2,500.
Effect of Stamp Duty holiday on Southport property market
Properties in the Southport command high yields (the return though rent payments and house price growth) which make them attractive to investors. It is therefore likely that Southport residents will see an increase in the number of Landlords entering the Southport buy-to-let market.
The lack of mortgages available to other buyers is likely to encourage landlords further but this is likely to have a knock-on effect for first-time buyers who will face stiff competition from Landlords on affordable properties while also struggling to obtain a mortgage in a difficult market.
It is unknown what the long-term effects on the Southport property market will be but in the short term it is likely that Southport Estate Agents will see a bounce in the buy-to-let market.
To speak to a Conveyancing Solicitor Southport call Debbie on Southport 01704 532890 or email firstname.lastname@example.org