Investors turned to the Bank of Mum and Dad for financial help in a bid to beat the Stamp Duty deadline, as the number of investment properties purchased using a gifted deposit increased by 5% during Q1 2016, according to data from My Home Move.
Its research identified the spike in gifted deposits among investors following the analysis of over 20,000 mover transactions over two years. However, the overall number of properties bought with a gifted deposit fell by 1.5%, during Q1 2016.
Doug Crawford, CEO of My Home Move said: “When we talk about the Bank of Mum and Dad, people usually think of first-time buyers who are struggling to afford their first home. However in this instance we’re not surprised that investors sought to utilise every avenue possible to secure their next property before the 1 April deadline. Asking for help through a gifted deposit, in effect helping to bring forward their purchase date, will have saved them thousands of pounds in additional Stamp Duty charges.”
The research also highlighted that investors with a gifted deposit favoured the regional hotspots of the East Midlands and West Midlands, both of which increased in popularity by 6% and 12% respectively, compared to the investor’s traditional choice of London and the South East, which decreased by 4% year-on-year.
Crawford added: “It is interesting that these investors, those who have had the deposit gifted, have made the decision to buy in areas outside of the Capital – suggesting that they either wanted to make their money go further by buying in less expensive locations, or there just wasn’t the stock available to buy in London.
“And when we looked further into the data, we also discovered that these investors chose to purchase flats and maisonettes over houses, indicating that they were looking for properties they could easily rent out as opposed to second-homes – making them the Buy-to-Let Landlords with a hotline to the Bank of Mum and Dad.”
The rush to beat the Stamp Duty deadline saw My Home Move complete a total of 13,695 cases in Q1 2016, with the month of March accounting for over 6,200 transactions alone – a record breaking total.