16th
Dec 2015
Those landlords taking on buy-to-let mortgages from April 2016, may be asking for lower prices than market value to compensate for the 3% stamp duty.
The research, from a national property group services company, also claims that if the tax cannot be offset by a lower price for a property, then landlords will encounter a loss of 0.2% on the gross yield.
This loss is the equivalent of 11 months rental income for many landlords, after mortgage costs and the average 68% loans have been taken into account.
North East and South West landlords will face the highest losses in relative income, as the stamp duty will eat up 14 months of the North East’s rental income and 12 months for the South West’s landlords. The North West landlords will be losing the equivalent of 8 months rental income.
Landlord buy-to-let purchases are the highest in the South, East of England and of course the capital. They can expect to face, from any April acquisitions, the highest increase of stamp duty with an average of £6,000.
The company says that the Midlands -16% and the North – 12% - acquistions of residences are purchased by landlords and from April they will have to pay an average £3,200 stamp duty.
The research director of the property services group, Johnny Morris, said: “The stamp duty increase will impact landlords’ purchasing power. Many entering the market will be faced with a choice between making a lower offer when buying or having to cover the additional costs themselves, impacting yields,”
‘Most landlords view property as a long term investment, on average holding a property for 17 years and larger investors will be exempt from the higher stamp duty rate. This means over the long term the private rented sector will continue to grow, but there’s likely to be a few lumps and bumps along the way as landlords get to grips with and adapt to the changing environment,”
Morris concluded by saying: “It’s unlikely the change to stamp duty will see an immediate impact on rents, Landlords are rarely able to pass on increasing costs to tenants, as rental prices are set by market forces. But if less landlords choose to invest in the sector in the short term, a fall in homes available to rent could put pressure on prices.”
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