UK property investment continues to grow, despite the stamp duty increase, which was introduced at the start of the current financial year.
The stamp duty increase was imposed on second homes and investment properties and these afforded an additional 3% surcharge. This alone has increased the cost of investing in property, outside of the property purchase price itself.
The introduction of the surcharge on second properties caused a surge of property purchases in March, prior to the start of the current financial year in April. This surge was followed by a slump in property purchases.
The slump was accredited partly to the new 3% surcharge and partly due to the increased number of purchases that were pushed through, prior to the start of April deadline. Since this initial reaction, there has also been a secondary slump, which occurred in reaction to the results of the public’s vote on the Brexit referendum.
Continued property investment growth
So, why is there continued property investment growth? According to property mentor Glenn Armstrong property, the number of buy-to-let investors continues to grow, spurred on by affordable mortgage deals. This has contributed to the increase in the number of UK landlords, which has risen to 1.75 million.
While there has been an increased cost in the relation to buying investment properties, particularly in areas such as London where property prices are high, other market metrics have spurred investors on.
In 2016, there has been a slowdown in property value inflation and while this hasn’t helped those already holding investment property and looking for a capital growth, it has caused a counterbalance against the additional surcharge that has been added to new investment purchases.
Property development loan specialists have suggested that investors could avoid the surcharge, by investing in alternative asset classes. Examples include student property and other alternatives, which fall under the stamp duty threshold or are recognised as commercial properties.