When Chancellor Rishi Sunak gave his Summer Statement last month, many people were surprised to learn that buy-to-let investors would be benefiting from the stamp duty holiday.
The punitive stamp duty rates for multiple homeowners, corporate buyers and properties costing over £925,000 have been a real bugbear for the property industry since they were introduced by George Osborne in 2016. They were intended to reduce activity and cool down the overheated market in these sectors and certainly seemed to be achieving this. So, it came as a pleasant surprise to estate agents when Sunak included all property purchases in the stamp duty holiday in his efforts to restimulate the property market following lockdown.
Although property investors and second homeowners must continue to pay a 3% stamp duty surcharge on purchases, they now pay nothing else on the first £500,000 of the property’s value as a result of the holiday. For an investor buying a £500,000 property, this halves the rate of duty payable from £30,000 to £15,000.
In the weeks that followed Sunak’s announcement, Zoopla recorded a 15% rise in buyers looking for investment properties and at Yopa we have seen similar interest from savvy investors.
Using our ‘Conversation Analyzer’ tool at Yopa - analytics software that listens to around 30,000 calls per month - we have spotted a notable increase in calls from customers looking to purchase second homes or expand their current portfolio. In fact, calls of this nature have increased by 30% since the holiday was introduced.
Our inbound teams ask callers questions such as, "What is your current position?" and "What are your plans for your current property?" and we have recorded marked increases in customers responding: “I am looking to purchase a second home and let out my existing home” and “I am now in a position to add to my property portfolio.”
Demand for rental property is now increasing across the country as opposed to being limited to towns and cities. Our own research indicates this is because younger people are keen to leave heavily populated areas, or no longer have the need to live close to their city centre workplaces.
A recent survey we conducted with Censuswide revealed that 50% of those aged 25-34 would reconsider where in the country they live if they were given more flexibility to work from home, and 1 in 4 millennials are now considering moving away from busy towns and cities.
This trend is already boosting demand for rental property in previously less popular areas, meaning there are plenty of opportunities to be had for landlord investors across the UK.
Investors have realised that tenants are looking further afield, and as a result, our agents are seeing city centre suburbs becoming unexpected investor hotspots.
The North West, in particular, is popular with investors at the moment, as properties remain affordable whilst yields continue to increase. Yopa agents in Manchester, for example, are seeing incredible demand for investment properties in areas outside the city centre such as Didsbury, Bury and Prestwich, with many properties selling for over asking price. Where estate agents might normally see a dip in demand in the summer, this isn’t the case thanks to both the reduction in Brits holidaying and the impetus provided by the stamp duty holiday.
With the cancellation of family holidays, trips abroad and other big events, some more fortunate people have found themselves with more money than they would have planned for. This, coupled with the cost savings involved in purchasing a property before the holiday ends in March, means both portfolio landlords and first-time investors are out in force. At Yopa, we expect this demand to swell as we approach the stamp duty holiday’s cut-off date.
*Chris Rosindale is the chief commercial officer at Yopa