The ongoing tax changes to buy-to-let are fuelling competition between landlords and first-time buyers, Savills’ director of residential research Susan Emmett claimed today.
She reckoned the 3% stamp duty surcharge which came into force in April and the upcoming reduction in mortgage tax relief from 2017 to 2020 will result in investors looking at cheaper markets to invest in, thereby going for the same homes as first-time buyers.
Emmett said: “We’ve definitely seen a slowdown in enquiries from investor buyers and the extra 3% stamp duty does make a huge difference to that initial investment.
“One change you might see is investors looking at cheaper markets where that has less of an impact.
“The problem with that is it goes right against the government’s intention of bringing in the 3% surcharge because they are competing more strongly with first-time buyers.”
She expected the buy-to-let sector to cool but not fall off a cliff.
Emmett added: “On one hand the extra cost does put a lot of people off.
“On the other hand if you are an investor there aren’t that many options out there at the moment so it might be that the residential property market is still your best option.
“I don’t think it is going to put everybody off but it has certainly put some people off buying higher value investment homes.”
Emmett reckoned the current housing minister Gavin Barwell, who was appointed in July, will lead a shift in government policy from an overwhelming focus homeownership to other sectors such as the private rental sector.
She said: “Maybe we might see a shift from the previous government’s huge focus on homeownership and promoting low cost homeownership.
“I think we are likely to see more support for other forms of tenure, particularly the private rented sector.”