There was a rush of investors buying before the stamp duty surcharge on buy-to-let and second homes was enforced on April 1, so there is no doubt that a lot of buy-to-let investors bought forward their purchase plans to save the tax, which immediately adds three per cent to your purchase costs. The additional levy is indeed substantial – in real terms, had you bought a property at £180,000 at the beginning of the year you would have paid £1,100 in stamp duty. But now, with the additional SDLT, that jumps up to £6,500 – a massive difference of £5,400, which would take a long time to reap back from any rental income. What could be said is that property investment is a long term thing, so you have to think long term about it. Traditionally, the value of property only really goes up. According to the Office of National Statistics, house prices have risen by an average of 6.9 per cent a year since 1980, when the average property price was just £24,000. And in 1952, the average house price was just £1,520 – you could have bought 187 of those with the £284,000 average from February. At the end of the day, the cost of borrowing is still at an all-time low and money in the bank still isn't earning much but you have to do what you feel comfortable with. The majority of landlords seem to share the opinion that property ownership will give good returns although not like in years gone by. Need some help? If you require help with your new or re-mortgage please do make contact and one of our qualified advisers will be happy to assist.
