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Stamp duty holiday prompts the number of landlords wanting to buy more buy-to-let properties to treble


10-27-2020

 

The number of landlords looking to buy another buy-to-let property has increased more than three-fold as they try to take advantage of the stamp duty holiday.

One in 10 property investors said they are looking to expand their portfolios, compared to only 3 per cent before the coronavirus pandemic, according to the findings by landlords insurance provider Simply Business.

It suggests that landlords are seeking to take advantage of the stamp duty holiday that is available until the end of March next year, as while they must still pay a 3 per cent surcharge they can benefit from the underlying tax cut.

Rental properties: This four-bed detached house in Lymington, Hampshire, is available to rent for 1,400 a month

Rental properties: This four-bed detached house in Lymington, Hampshire, is available to rent for 1,400 a month

Landlords cannot get zero stamp duty bills as they are still required to pay the buy-to-let and second home surcharge of 3 per cent, but as with owner occupiers they can still save a substantial sum from the removal of the standard rate of tax below 500,000.

Following the stamp duty holiday, Simply Business surveyed 1,385 landlords. It found that 10 per cent said they plan on buying more rental properties, while only 5 per cent said they had any intention of selling existing properties.

The rise in confidence among landlords could lead to a spike in property investments in rural and coastal areas, according to Simply Business.

It said that landlords may shift their attention to these areas to meet demand from tenants seeking more indoor and outdoor space amid the global pandemic.

Pictured: Kingswear in Devon. Are landlords using coastal properties to meet tenant demand?

Pictured: Kingswear in Devon. Are landlords using coastal properties to meet tenant demand?

This three-bed semi-detached house in Paignton, Devon, is available to rent for 875 a month

This three-bed semi-detached house in Paignton, Devon, is available to rent for 875 a month

Before the pandemic, Simply Business had already revealed in separate research that 29 per cent of landlords believed city properties no longer represented a worthwhile investment.

Rental properties cities typically produce lower yields, which are calculated using the price of a property.

House prices in cities tend to be higher, which in turn lowers the yield or rental return that investors can achieve. However there are other reasons for investors to invest in cities, such as potentially high capital growth. 

What rentals are available in the city? This three-bed flat in north London's Haringey, is for rent for 2,149 a month

What rentals are available in the city? This three-bed flat in north London's Haringey, is for rent for 2,149 a month

Several other pieces of research have recently highlighted the trend for people looking to move to the country, having been stuck in their homes during lockdown.

It includes data from estate agent Savills that revealed village locations have become so desirable that 40 per cent of house hunters say this is the type of area they would now like to live in - shifting focus away from traditional favourite aspects, such as walking distance to the station.

And property website Rightmove revealed that property searches have doubled for homes in small towns and villages with less than 11,000 residents.

For rent: This four-bed terraced house in Pewsey, Wiltshire, is available for1,100 pcm

For rent: This four-bed terraced house in Pewsey, Wiltshire, is available for 1,100 a month

Alan Thomas, of Simply Business, said: 'The coronavirus outbreak and consequent lockdowns have been transformational in renters' attitudes towards property, and therefore where landlords are looking to make their next investment.

'The pandemic has resulted in people spending more time at home - both for work and leisure, while many of the benefits of city living have been impacted. It's no surprise to see that renters are valuing larger properties with outdoor space. 

'There appears to be a shift in terms of what is considered a desirable property by tenants, and residential landlords - crucial to both the economy and the local communities where they provide housing - along with the market in general, are reacting to this. 

'What is clear though, is that the buy-to-let market is going through somewhat of a transition, driven by a move away from the previous demand for city centre properties.'

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