After the announcements in George Osborne’s Autumn Statement, it seems inevitable that the UK property market will be shaken up by the rise in stamp duty which comes into force by April 2016. The Chancellor of the Exchequer introduced the government’s plans to increase the Stamp Duty Land Tax by 3% on second homes and Buy-to-Let properties. But, will these rises see an increase in house buying before the changes come into effect?
It could be that the changes will lead to a significant increase in the amount of people buying homes before April, especially those who have been deliberating whether or not to buy additional properties. What’s more, with the tax due to add a significant cost to landlords, buying another house before it comes into effect does seem the logical move.
Who can buy?
As this only leaves a four month window, it’s likely only those who are in a financial position to buy, or who are already in the process of buying, can benefit and complete their sales before the deadline. The Bank of England has already warned mortgage companies not to relax their lending criteria to allow more people to purchase in anticipation for the rush of lending.
What could the effects be?
The rush could force housing prices to rise higher in the short term; especially if investors flood the market. This could also make it even more difficult for first time buyers to get on the property ladder and equally it could also mean that those who are currently renting face rent prices increase, as landlords attempt to deal with the growing costs.
Alternatively, it could also see an increase in sales by landlords who own several properties. Experts predict that those with multiple properties will be hit the hardest by the rises, leading to many having to sell up before it comes into effect. Although those who own 15 or more properties and/or commercial properties are exempt.
In the short term then, it would appear that there’s the strong possibility of unprecedented house buying due to the additional costs. However, with one aim of the Stamp Duty rises being to price out buy-to-let private landlords in the long term, we may also see fluctuating rental markets too.
Ultimately, though what happens remains to be seen and advice for those looking to buy or rent would be to keep a keen eye on the property markets, to keep abreast of the latest developments.