Stamp Duty surcharge, Investors, First-time Buyers, Sellers, Supply, Osborne, Help to Buy ISA Property News & Views from Estate Agent Mishon Mackay» Blog Archive » What effect has the stamp duty surcharge had on the property market?

What effect has the stamp duty surcharge had on the property market?


There was a frenzied and slightly chaotic late rush from investors to get deals done before the introduction of George Osborne’s controversial 3% stamp duty surcharge on April 1.

This included estate agents and conveyancers staying open late into the night to push things through before the deadline hit.

The reforms, which saw an additional stamp duty tax levied on second home owners, faced plenty of opposition in the months after it was first announced, but the Chancellor decided to push ahead regardless.

Now the new rules have been in place for nearly a month, what does the post-stamp duty surcharge landscape look like?

Firstly, there does seem to have been a definite lull in the buy-to-let market. So many investors were desperate to get deals sorted out before the tax changes hit, meaning a tail off since has been both unsurprising and inevitable.

The buy-to-let market, while taking a definite short-term hit, is also expected to recover once landlords and buy-to-let investors regroup and re-evaluate the marketplace.

Excellent investment opportunities, where a good level of rental income and solid rental yields can be achieved, are still going to be there, stamp duty surcharge or no stamp duty surcharge.

Once things have settled down and buy-to-let investors have reassessed their options, activity in this market is expected to rise again.

There were worries that buy-to-let investors and landlords would sell their investments because of the additional stamp duty tax, but this doesn’t seem to have materialised in any great number as of yet.

On the other hand, it does seem like tenants will suffer the most as a result of Osborne’s measures, with landlords passing on the extra payments in the form of higher rents.

The slowdown in demand in the buy-to-let market doesn’t mean demand in general is down, though. In fact, quite the opposite.

Recent figures from the National Association of Estate Agents suggest that both demand and house prices are at record highs. Where the buy-to-let investors have left a gap, first-time buyers have stepped in to take advantage.

A few months ago first-time buyers were having a difficult time of getting onto the property ladder, after years when that task was being made almost impossible by high house prices and equally high deposits.

It’s still difficult for first-time buyers, but there are at least signs that it is getting easier for this demographic.

The space vacated by buy-to-let investors – who have often been criticised for outbidding first-time buyers and hoovering up available stock to expand their portfolios – has given those trying to dip their toes into the property market for the first-time a little bit more space to breathe.

That was always the intention of the tax changes – to make it more difficult for buy-to-let investors to buy up property, while making that task easier for first-time buyers – a segment of the property market that the government has frequently been accused of neglecting.

Now, though, the number of first-time buyer schemes is on the rise – with initiatives such as the Help to Buy ISA and shared ownership projects both designed to boost the supply of affordable housing. The Lifetime ISA, which will come into force in April 2017, is another attempt to help first-time buyers onto the ladder.

It’s not just first-time buyers keeping demand high, however. Second-steppers and downsizers are also on the hunt for properties in increasing numbers, while interest in UK property from overseas is still rock-solid.

Supply, on the other hand, is still very low, which is good news for sellers but not such good news for buyers.

The government insists it is taking steps to boost supply, but they have been widely criticised for not building enough new homes to keep up with demand, and also for these homes not being affordable for those on average salaries.

It would appear that sellers haven’t been affected much by the new stamp duty surcharge, because demand is still high and so too are house prices.

This means the pool of potential buyers is still large, the scope for negotiating on asking prices that much greater and the prospect of a quick house sale very good, as eager buyers look to push through deals before being gazumped by the competition. In other words, it’s a pretty good time to be a seller and a pretty good time to bring your home to market.

At Mishon Mackay our aim is always to get you the best possible price for your home. Please get in contact with Marc Cox on 01273 416732 for more information about how to get your home sold in Brighton, Hove and the surrounding areas.

If you would like an estimate of how much your property could be worth in the current marketplace, check out our instant online sales valuation tool.