Stamp duty changes influence housing surge

The changes in stamp duty confirmed in the recent budget announcement are thought to have inspired a surge in house prices and market movement as the average house price increased by 1.3% in the last month to £307,033. It is thought that in a bid to beat the introduction of the new rules buy to let landlords have pushed through sales in a bid to save cash on their investments.

The changes outlined in a previous article mean that those buying a second or multiple home(s) would be subjected to a charge of 3% or more on stamp duty, having previously not had to pay. The flurry of activity from landlords buying up properties at the lower end of the housing market has set off a reaction further up the chain with a demand for higher priced homes and an increase in those moving on. The figures which were released by Rightmove demonstrate that people are selling homes for more this April than in April 2015.

The new stamp duty rules which have now been introduced (since 1st April) could mean that first time buyers now have an advantage over buy to let landlords, giving them a 3% edge and could see a lull in buy to let activity as the changes bed in.

Rightmove figures give the impression that asking prices have increased in the space of a month with the average 3/4 bedroom property being marketed for 0.6% more than a month prior. The site figures show that this isn’t an isolated incident as figures across the whole of England and Wales show the same trend for April 2016. Both the cheapest areas and the most expensive areas of the UK showed an increase in prices – north east of England was up 3.5% and the east of England up to 10.8%.

The changes in stamp duty have met with criticism from different quarters of the housing market, the thinking being it could damage growth and cause problems with rental stock as buy to let landlords look to reduce their portfolio. It is however early days and the true picture could take some months to become clear as the dust settles from the race to complete deals and absorb the impact of the increases to those affected. Whilst the initial change may look positive it could be a very different picture as the year develops.