Can Stamp Duty really change the face of the buy-to-let sector?

With a little over two months to go until changes to Stamp Duty are introduced that will impact purchasers of second (or more!) properties, it is undeniable that there is a certain additional buoyancy in the marketplace as purchasers focus on quick completions to avoid increased costs. 

For the industry this is, of course, positive – with continued demand from tenants (our figures would suggest up by at least 5% year-on-year), increased quantities of stock are desperately needed and the sooner these become available, the better.

But does that mean that once the ‘rush’ to purchase before April has passed, the buy-to-let market will slow down, negatively impacting on stock levels once again?

I don’t believe so – or at least, we won’t be able to blame stock levels on this change.  

Seasoned investors tend to focus on capital growth (which in many cases will negate the impact of additional Stamp Duty charges) and are secure in the belief that buy-to-let is a solid medium to long-term investment – especially when compared to stocks and shares. 

Whilst they may be pushing through additional purchases over the next couple of months, it is unlikely that they’ll stop investing post-March so in that respect, we don’t need to panic.

We may see a decline of ‘get rich quick’ shorter term investment, but arguably these investors have quite specific reasons for investing to start with and so we’re unlikely to see the sector suffer if, or when, they exit.

Of course, there continues to be fledging investors who have entered the buy-to-let market since last year’s relaxation of pension legislation. 

It is here that there remains a certain threat that the Stamp Duty changes could negatively impact the market – but only if we, as an industry, allow it to.

In my experience, a significant majority of landlords (whether seasoned or new to the sector) invest for the long-term and as such, we should be sourcing longer term quality tenants for them.  

This provides the maximum certainty to the investment and plays well to landlords’ dislike of void periods, arrears and ‘here today, gone tomorrow’ difficult tenants with little or no personal regard for the property.  

We also need to consider that whilst demand outstrips supply, rents are likely to remain high and this is good news for investors – certainly better news than the ‘bad’ news of Stamp Duty increases.  

New build projections signal that required stock is unlikely to be available before five or even ten years, so buy-to-let will remain a popular investment option and so long as investors appreciate the entry and exits costs associated with such an investment (including Stamp Duty!), and engage with a reputable agent, they should be fine.

*David Westgate is Managing Director of Andrews Letting & Management