The number of second homes liable to pay stamp duty increased to 62,800 in the final quarter of last year, up from 56,200 in Q3 and 30,400 in Q2, suggesting that many people believe that investment in buy-to-let property is still worth pursuing.
The introduction of the 3% levy on stamp duty in April 2016 was expected to sound a death knell for buy-to-let property. But the fact is that many investors remain attracted by the high yields, low void periods and potential for capital appreciation that buy-to-let offers to be deterred by the introduction of the surcharge.
Instead of steering clear of the market, many buy-to-let landlords continue to add to their property portfolios, as reflected by the significant increase in the amount buy-to-let investors borrowed to invest in property towards the end of last year.
Landlords borrowed £3.2bn in November 2016, up 10% month-on-month, the Council of Mortgage Lenders (CML) said, which was the highest monthly level since the stamp duty changes on second properties were introduced last April.
The government has made £519m from the 3% surcharge on second homes in Q4 2016 – and £1.19m since Q2 2016.
As well as buy-to-let investors, the second home 3% stamp duty tax can apply to those purchasing holiday homes and parents buying for children, for example.
Commenting on the HMRC’s latest quarterly stamp duty statistics, Nick Leeming, Jackson-Stops & Staff chairman, said: “So far £1.19m worth of stamp duty receipts are estimated to be attributable to the additional 3% element payable on second homes, a significant windfall for Treasury coffers.
“Between Q2 and Q3 the number of second homes liable for the 3% surcharge nearly doubled. This increase is understandable as many buy-to-let investors would likely have rushed to make purchases before April 1st, but the number of liable second home transactions is up again in Q4 to 62,800.
“The data suggests that buy-to-let investors are not being deterred by the new tax which is supposed to be dampening demand from this group to the benefit of first-time buyers. We will see the true impact of this policy in time, but my fear is that additional costs will be passed on to tenants.
“The better solution is a real concerted drive to build more homes, rather than targeting buy-to-let investors – I hope the upcoming Housing White Paper contains a real blueprint for change in this regard.”