Buy-to-let investors spring into action to save on stamp duty

The tax ‘holiday’ is attracting landlords back into the market in huge numbers, find Melissa Lawford and Adam Williams

Buy-to-let landlords have swooped to take advantage of the stamp duty giveaway. Inquiries from buy-to-let investors jumped by 18pc after the Chancellor’s stamp duty holiday announcement last week, Zoopla, the property website, found. In the parts of the country where landlords can expect the biggest savings, agents report much bigger surges.

In a bid to boost the market, Rishi Sunak raised the tax-free limit from £125,000 to £500,000 in England and Northern Ireland until March 31 2021. Landlords continue to pay 3pc of the entire value of the property in stamp duty, but they can still see their tax bills as much as halve.

The Scottish Government has since raised its tax threshold to £250,000, which includes buyers who purchase additional properties, but investors there have to pay a higher surcharge of four percentage points. Wales also has a holiday, but investors are excluded from the benefits.

The biggest buy-to-let savings in England are concentrated in the price range of £400,000 to £500,000, meaning a boom for investors in London and the South East.

Jamie Brown of Brown & Merry estate agents in Watford, Herts, said inquiries from buy-to-let investors had jumped by 40pc since the stamp duty holiday was announced. Previously they accounted for two in 10 local buyers, but now they make up four in 10.

In the weekend after the announcement, Galliard Homes, the housebuilder, agreed four sales to investors in its Westgate House development in Ealing, west London. David Galman from the firm said: “In every single transaction we included a clause that if the development’s completion goes beyond March 31, we will pay the difference in stamp duty.”

The tax break for investors comes in stark contrast to the Government’s recent buy-to-let policies, such as introducing the stamp duty surcharge on second homes in 2016 and cutting landlord tax relief. “It is a game-changer,” said Mr Galman.

Spencer Fortag of Dockside Property Services, a Kent estate agent, said that since the stamp duty holiday was announced “it has just gone bonkers”. The number of inquiries from firsttime investors is up 20pc, he said.

The so-called “Bank of Mum and Dad” is also moving in. James Holmear of Redrow, the housebuilder, said the waiting list for its Frenchay Gardens project in Bristol lengthened by 30pc in two days after Mr Sunak’s announcement. Investors included parents buying for their children.

Martin Bikhit of Kay & Co estate agents said interest from investors was concentrated below the £500,000 threshold. Above this level the proportionate savings shrink.

Meanwhile, in the cheaper parts of the country, such as the North East, the stamp duty holiday has a minimal impact. It will save investors here £280 on the average purchase, compared with £7,240 in London, Hamptons International, the estate agents, found.

Max Armstrong of North East Property Investments, a portfolio management service, said investors’ interest in the region was already high, but had remained unchanged since June.