. It is believed that this is largely down to the new stamp duty, which is set to be introduced by the government on anybody who wishes to buy a second home.
As of 1 April, all individuals who wish to buy a house or flat with the intention of renting it or using it as a second home will be subject to an increased rate of stamp duty. The policy applies to anybody buying a home that costs more than £40,000 and the rate of tax that they will pay will be three percent higher than it would have be otherwise.
Rics (The Royal Institute of Chartered Surveyors) revealed that the housing market has seen an unexpected rise in recent months, particularly in the month of December. The institute described this activity as being “unusually buoyant” for this time of year. Many market analysts believe that the reason for this recent surge is largely due to the level of buyers that are attempting to beat the tax hike. Many individuals that are closely in tune with the markets said that this trend had shown signs of continuing into 2016.
One businessman from a company that is based around aiding investors in locating relevant properties to purchase, Daniel Latto, said that he had noticed a marked increase in the number of investors that were trying to finalise their deals before the change is brought into force. The rules were revealed back in autumn when the chancellor, George Osborne, made his autumn statement.
Daniel Latto commented saying:
“One client is looking at purchasing 10 properties at around £50,000 each outright for cash which will generate approximately £4,000 per month income for him.”
“He ‘s been meaning to invest for a while, and this was the ëtrigger ‘ that forced his hand as it were. He has said that he is unlikely to purchase any more in the future.”
Previously a candidate on the television series “The Apprentice”, Jamie Lester now runs Haus Properties- an estate agency based in west London. He said that he had definitely noticed a “huge appetite” in the market from investors. Only last week he began advertising a new-build development, in Chiswick, in the Financial Times.
He said that the advert was complete with a very big hint about the fact that the properties were going to be available before the new rules came into force.
“We did a stamp on the advert saying ëmove in before the 1 of April ‘, we didn ‘t say ëbeat the taxman ‘. People who knew about the changes knew exactly what we meant.”
He went on to say that around 51 individuals had got in touch due to the advert, and he said that more than 50% of them were interested in buying the homes in order to rent them out or use them as second homes.
He also said that many of the people or companies, which were now looking to buy properties, were having a clause put into the contract that said that the purchase had to be completed before 1 April.
“In this area people are spending £1m so the typical saving is £30,000.”
The area director for estate agency Chestertons, Cory Askew, said that he has seen similar movement in the central London market. He noted that the policy has resulted in “a huge rise in activity and offers” ever since George Osborne revealed his plan back November.
He went on to say:
“December and January are not normally busy months for us ñ it was fairly striking the change in activity.”
For a large amount of his clients, Cory Askew believes that completing their deals before the deadlines could save them somewhere in excess of £43,000.
He commented saying that:
“No matter how wealthy people are, they don ‘t want to spend an extra £43,000.”
“If we have the surge in demand now we can only assume it will quieten down in April, or there will be strong negotiation by buyers.”
The boss of Click Lettings and Sales in Birmingham, Tony Lune, says that the vast majority of his phone calls are now coming from investors who are attempting to expand the number of properties that they own to let. He went on to say that he has noticed more and more buyers who are trying to move to properties away from London in search of more competitive prices. In central London at the moment, one-bedroom flats can be sold for somewhere between £160,000-£170,000. This means that buyers who complete their deals before the deadline will be able to save themselves somewhere in the region of £4,800 in tax.
Lune went on to say:
“We haven ‘t had any put it into contracts but three or four people have told me that they want it done before April.”
LMS do a lot of conveyancing work for people who wish to purchase buy to let properties, Andy Knee said that he hasn ‘t yet noticed any contracts that contain clause regarding completion before the deadline but he did think that there would be “a lot of pressure on the system over the next eight weeks or so”.
He went on to say:
“Every time you give notice of a tax change you distort the market and I think there will be some of that.”
However, he did say that many people would not be rushing to buy property right now because of the fact that so many people on the market at once may actually be increasing prices.
“They will be thinking that if demand is pushing prices up they might end up paying more now than after April.”