Market Insight - June 2016
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Landlords change tack after new stamp duty change.

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Landlords have already started to change their buying habits in response to the new stamp duty charge for investors introduced in April 2016. Rather than being dissuaded by the new extra 3 per charge it seems that landlords are buying cheaper homes that offer a higher yield and of course a lower stamp duty bill. 

The average house price paid by landlords fell 8.3 per cent month-on-month in April. On average investors paid £178,000 for a home in April 2016, compared to £194,000 last month and £188,000 in April 2015.

London saw the biggest fall in the average price paid, falling from £436,000 in March to £365,000 in April. While overall house prices in London rose 13.9 per cent over the last year, the Capital’s landlords paid an average of 8.2 per cent less than they did in April 2015. Generally lower priced markets saw a less marked response from landlords with average prices paid by investors rising month on month in the North East and Yorkshire. 

April saw fewer landlords purchasing homes, after a spike in activity in the first three months of the year. Landlords rushed to complete on their purchases before 1st April to avoid a bigger stamp duty bill with 61 per cent more landlords buying in the first quarter of 2016 compared to the first quarter of 2015. Many sales which would otherwise have normally completed in April were pulled forward into March.

April’s fall off in investor activity seems to be the consequence of landlords bringing forward purchases to beat the stamp duty deadline. There are also early signs that first-time buyer numbers are increasing as investor activity has declined. But it’s too early to tell whether this is simply the after effects of the stamp duty rush or the start of a longer term trend. 

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