Newsletter 16th December 2015
We’ve seen a lot of focus on the announced stamp duty changes. Below is an update on the small detail which we feel has been omitted by a lot of general write ups.
As we near the end of the year, as with every December we have been busy with our buying clients pushing exchanges through before the market shuts down. This has involved a lot of chasing solicitors, sweet talking surveyors to fit in last minute surveys and expediting mortgage offers.
On the rental side we have a large number of relocation families arriving just before Christmas so we’ve been busy making sure everything is in place for them.
We hope you’ve enjoyed our market updates this year and we wish you all the best for the festive period.
Transaction of the month: Off market 3 bedroom property bought in Highbury
Our clients lived locally and were already familiar with the area but were struggling to find the right property. We searched Highbury in depth and unearthed a really interesting off-market three bedroom maisonette through a predominantly lettings focused estate agency. Our reputation in the market and assurances of a quick exchange ensured that our clients paid slightly below market rate. The opportunity to add value at a later stage by extending the property and carrying out refurbishment has further resulted in a very solid investment for our delighted clients. We thought we’d share their feedback:
“We reflected on the weekend on our decision to work together with you guys and said what a great decision it was. You did a tremendous job getting everything moving and helping us through that cumbersome process of buying.
“Absolutely fabulous that we found an off the market property at a very competitive price. That was exactly what we were looking for when the journey started. We can’t say thank you enough for this absolutely superb service.”
Stamp duty changes – who will be affected and how
The Chancellor announced in his 2015 Autumn Statement that an additional 3% of stamp duty will apply on the acquisition of “additional properties” such as – but not limited to – buy to let properties and second homes. It is expected that this will apply to overseas based as well as domestic buyers.
This additional Stamp Duty Land Tax (SDLT) will apply to any properties which complete on or after 1st April 2016. There are some exceptions.
It has been confirmed that this will not apply to corporates or funds who own 15 or more properties. In addition, there are indications that an exception will be made for purchases of off plan new build properties completing after 1st April provided they exchanged before 25th November 2015.
For those buying a new main residence and retaining their existing home, there are indications that they will have to pay the additional SDLT but can claim it back if they sell their original residence within 18 months.
What does this mean for the market? We expect this policy to hurt and we have already seen an increase in buyers engaging our services over the past couple of weeks wanting us to find and complete on a purchase for them before 1st April next year.
As we get closer to 1st April we expect to see prices renegotiated downwards where purchases risk missing the deadline.
For example a £1m buy to let or second home purchase will incur £30,000 more of SDLT after 1st April. This will particularly impact those with higher borrowing levels and we may see these investor buyers focusing on lower price bracket, higher yield properties in an attempt to generate a higher cash surplus. At the top end of the market this will also likely make buyers think twice. A £5m purchase buying a London base for example will incur an extra £150,000 of stamp duty.
The London market is forecast to see modest price rises over the next 3 years ranging from 3 – 5% per annum (Source: Savills) so buyers may console themselves in the hope that price rises will compensate them for their higher transaction costs. But it may take a while for the market to accept this and we may see reduced transaction levels in the interim.
Getting on the ladder – tips from the experts
Jo Eccles quoted in City AM: Getting on the property ladder is hard work… Here are some tips from industry experts to help you on your way. Jo Eccles, Managing Director of Sourcing Property: “When searching for a property, your relationship with the agent is key…”
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