A quarter of all residential properties acquired in the summer were either a buy-to-let investment or a second home, fresh data from HMRC shows.
Despite the introduction of the 3% stamp surcharge in April, the figures reveal that 56,100 of 235,000 purchases were either an additional home or buy-to-let acquisition.
The introduction of the surcharge earned the taxman an additional £440m in the three month period of July to September. In total, the 86,400 purchases of additional properties since April have earned HMRC an extra £670m from the move, which has taken the total to £1.28bn.
The statistics also reveal that in the three months of April, May and June, 30,300 of 207,900 purchases were for second homes, suggesting that buy-to-let investors had already rushed to beat the 1 April hike, illustrating the growth in popularity of buy-to-let property as an attractive investment at a time of low interest rates and volatile stock markets.
The buy-to-let boom of recent years has fed the stereotype that Brits are obsessed with property. Ever since Margaret Thatcher declared her belief in a ‘property-owning democracy’ and introduced Right to Buy in 1980, the UK was converted into a country that saw houses as something to make money from, not just to live in.
Having long provided mega double-digit returns for investors, investment in buy-to-let has outperformed all major asset classes in recent years, with total annual returns from buy-to-let property hitting 12% in 2015 or £21,988 in absolute terms.
But the government’s decision to introduce a number of measures to curb the growth of buy-to-let landlords, including the addition of a 3% extra charge for buy-to-let and second homes on all stamp duty bands above a £40,000 starting level, which has more than trebled the bill for buying a £275,000 home - hiking it from £3,750 to £12,000 - prompted concern that the buy-to-let windfall may be coming to an end.
However, the latest tax data indicates that despite the extra costs and the EU referendum decision, appetite for buy-to-let remains robust, as investors continue to be drawn to the buy-to-let market as the returns routinely outperform those of other investments.
Buy-to-let returns continue to beat all other mainstream investments, including commercial property, UK government bonds and cash, while remaining a highly popular alternative to the volatility investors often risk when investing in the stock market.
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