Investors are looking to beat the April deadline

‘Don’t be put off by the new stamp duty surcharge’ says Fenn Wright, as lettings industry sees rush of activity as new April stamp duty surcharge approaches.

Mortgage approvals have risen 39.3%, the highest level in nine years, according to latest research. This boost was fuelled by buy to let investors rushing to buy property ahead of April’s 3% stamp duty surcharge.

Band Existing residential SDLT rates New additional rates for landlords
£0-£125k 0% 3%
£125,001 – £250k 2% 5%
£250,001 – £925k 5% 8%
£925,001 – £1.5m 10% 13%
£1.5m + 12% 15%

Fenn Wright has noted that Essex and Suffolk has seen a huge difference in buy to let activity since the announcement of the new surcharge. 

“With our area being a hot spot for commuters, due to more affordable rents and quick transport links to the City, this is of no surprise,” says Joseph Hall, Head of Business Development, Lettings. “We have seen a noticeable up surge in enquiries from investors looking to beat the April deadline, with particular appetite for properties with existing tenants in situation as they look to capitalise on long standing tenants.’’

Currently, stamp duty is paid by everyone who purchases a property above £125,000. From April of this year, those purchasing an additional home in England, Wales and Northern Ireland will be hit with an extra 3% cent on each stamp duty band. This will therefore include the 0% band – properties up to the value of £125,000. There are some types of property which will be exempt, including caravans, mobile homes and houseboats. 

For example, anyone buying a £200,000 second home or buy to let before April pays £1,500 stamp duty. This is based on paying 0% on the first £125,000 of the property value and 2% on the portion between £125,001 and £250,000. However, with the new 3% surcharge, landlords will have to pay 3% for the first £125,000 and 5% instead of 2% on the amount between £125,001 and £250,000. This means that the landlord would pay £7,500 of stamp duty.

However, Joseph advises landlords not to be put off by the new surcharge: 

“Despite there being a rise in their stamp duty bill, it is still worth investing in residential property. Our areas offer excellent returns on investment for our clients with the south east consistently achieving yields in the region of 5-7%. Furthermore, demand from tenants is up year on year for quality accommodation due to our location. With a shortage of stock, this has steadily fed further increases in rents and should continue to do so as first time buyers struggle to purchase a home, with no choice but to rent for longer periods. Demand for two/three bedroom family homes is at an all-time high, not only in town centre locations, but also outlying villages. Our offices in Chelmsford, Witham, Stanway, Colchester, Manningtree, Ipswich and Kesgrave are all seeing high demand from tenants for long term accommodation.”

Three examples of properties which present excellent buy to let opportunities: 

London Road, Ipswich

Halstead Road, Lexden

London Road, Ipswich (2)

For more information about how the new stamp duty change will affect you, contact the lettings manager at your nearest Fenn Wright branch.