So what do Mr Osborne’s tax changes mean for buy-to-let investors in Coventry after 1st April 2016? Time for a heated debate? Well it would have been nice to have had one at least!
“Frankly, people buying a home to let should not be squeezing out families who can’t afford a home to buy,” So George Osborne proclaimed in his Autumn Statement, before announcing major policy changes aimed at making buying property to let out less profitable to investors. Noble comments indeed but do we seriously believe that the intention is not to raise money for the treasury? Will this decision slow Buy to Let? Will first time buyers and owner occupiers have more opportunities?
The reigns have been pulled taught at the coal face and beyond into the mine. To purchase an investment property or a second home the buyer will, from April 1st, have to spend 3% more in stamp duty than anybody else. This places a charge of 3% up to £125,000 where owner occupiers pay 0%. Between £125,000 and £250,000 3% is added to the existing 2%. £250,000 to £925,000 adds a further 3% to the existing 5%. Then, once rented, the landlord will also have to suffer a variety of further profit dampening changes. I’m not crying about all of this but I do think the changes are too fast and too hard.
At Elizabeth Davenport we have seen a volume of buyers investing from London. This is where Mr Osbourne’s theorising hits a potential brick wall. His buy to let investors in Shoreditch, Twickenham and Croydon may well decide to look elsewhere where the expenditure is less and the short term returns equally attractive. This may free up potential “1st Time Buyer” opportunities on his doorstep but geographically the investment will just occur elsewhere. My theory is simple at best and wrong at worst. Realistically the volume of buy to let investors from outside of Coventry will grow and there will no change to the volume of first time buyer opportunities whatsoever.
Thinking practically if you wish to purchase a second home or buy to let investment then move fast! Look for chain free properties or tenanted homes. Don’t quibble about a reduction of £2000. On April 2nd it will cost you a lot more than that.
