Around one in seven residential properties purchased in November were snapped up by buy to let investors, according to Countrywide research.
A report by Countrywide’s up-market brand Hamptons says landlords comprised 15 per cent of all purchases last month, over half of which were in cash. It also predicts that be the end of the year – just two weeks from now – investors will have bought around 134,000 homes in 2020, a slight improvement on last year.
“Just like in the months leading up to the introduction of the three per cent second home surcharge back in 2016, landlords have rushed to take advantage of reduced stamp duty bills” notes Aneisha Beveridge, Hamptons’ head of research.
“But the difference between today and 2016 is that the stamp duty cliff edge is around five times smaller, meaning the financial impact of missing the deadline is reduced” she adds.
The average price paid for a home by a landlord in November was £180,000 which is around £80,000 less than that paid by an owner-occupier.
This means a typical investor who still pays a three per cent stamp duty surcharge will incur a stamp duty bill of £5,400 if they complete before the holiday ends. However, if they miss the deadline the typical bill will rise by £1,100 to £6,500.
Landlords will pay an estimated total of £365m in stamp duty on the sales they have agreed between September and November if they complete before March 31.
However, this figure has the potential to rise by 20 per cent or £74m – taking the total to £440m – if the stamp duty holiday is not extended and they complete after the end of March next year.
Regionally this rush has been concentrated in the Midlands and the North.
Some 22 per cent of homes sold in the West Midlands were bought by investors, followed by 18 per cent in both the North East and North West.
Even in London – not favoured by investors in recent times – the figure stands at 15 per cent.
Beveridge concludes: “With over half of investor purchases made in cash during November, those taking advantage of the [stamp duty] holiday are disproportionately larger investors expanding portfolios rather than new investors starting out. And with landlords also making up a rising proportion of sellers, in many cases, larger landlords are buying homes from smaller landlords.”
This post has originally been featured in Letting Agent Today.