Demand is surging and still outstripping supply, says Royal Institute of Chartered Surveyors
George Osborne is “repeating the mistake of his predecessor Nigel Lawson”, Peter Spencer, professor of economics at the University of York, told the Financial Times.
Lawson, Conservative chancellor under Margaret Thatcher, “set an August deadline for cohabiting couples to claim double mortgage interest relief in his 1987 budget”, creating a market-distorting rush to secure sales, said Spencer. The incoming “landlord tax” imposed at the Autumn Statement in November similarly “guarantees a bunfight in the first quarter followed by a relapse over the rest of the year”, he added.
Under the plans, buy-to-let investors will have to pay an additional three per cent stamp duty surcharge. This adds a £3,000 tax bill to the purchase of a £100,000 home that would normally be free of stamp duty – and no less than £7,500 to a home worth £250,000.
The measure, which comes into force in April, is aimed at curbing the rapid growth of private landlord buying, but affects all second-homes buyers.
Reuters says such sales made up a quarter of the market last year, far more than in most other advanced economies and a major cause of rising prices that are squeezing younger first-time buyers out of the market.
Spencer’s words appear prophetic. Last week, the Council for Mortgage Lenders revealed a late surge had pushed buy-to-let lending up 35 per cent year-on-year in November. Now new figures from the Royal Institution of Chartered Surveyors (Rics) reveal buyer enquiries were at a three-month high in December, driven by demand from would-be landlords seeking to complete before the tax comes into force.
Jordan Yaffe on of Mayweather Estates tells us “We have many investors now looking to complete before the end of March deadline. There’s still time for new investors to purchase before the deadline actually kicks-in. We still believe that property prices will continue to rise with some of the popular press believing there will be 50%+ gains over the next 10 years. Property still continues to be a long term safe investment.”
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