Buy-to-let investors rushing to buy UK properties ahead of stamp duty hike

KUALA LUMPUR (Feb 11): Buy-to-let investors in the UK are rushing into the market ahead of a stamp duty increase, said surveyors in a report by BT.com.

Members of the Royal Institution of Chartered Surveyors (RICS) said new buyer enquiries rose for the tenth month in a row in January as home prices face upward pressure, as they seek to beat the deadline of a 3% stamp duty hike in April.

Moreover, 72% of them forecasted a further increase in buy-to-let purchases before the new rates are effective.

Chief economist Simon Rubinsohn believes many buy-to-let investors are rushing to get into the market ahead of a 3% increase on current stamp duty rates that commences on April.

"How the tax changes planned for the buy-to-let sector over the next few years play out remains to be seen but there are concerns raised in the survey that some existing landlords will look to either gradually scale back on their portfolios or exit the market altogether as the more penal regime begins to bite,” he said.

"Against this backdrop, it is perhaps not surprising that the RICS indicators point to further rent as well as house price increases,” he added.

While the UK housing market saw growth in supply of homes for January – the third month in the last 18 – RICS said it is not enough to meet growing demand from buy-to-let investors, leading to rising home prices.

London, in particular, saw more incoming property supply whereas other areas saw little new supply.

There are concerns that the higher levy will deter landlords from investing in new properties, reducing supply and prompting rents to rise as tenants fight for homes.

"We have reformed stamp duty to help create a level playing field and help first-time buyers get on the housing ladder. This policy is not expected to have an effect on rent levels,” said a treasury spokesman.

Do not ask your auntie about the value of your home. Click here at The Edge Reference Price to find out.