April’s buy-to-let stamp duty deadline created a record high in the average price of properties coming to market, it has emerged.
More than £3,840 was added to the average house price, which equates to a 1.3% monthly increase and takes the record to an all-time high of £307,033.
The surge is attributed to the Chancellor’s stamp duty deadline set out in his autumn statement, as investors and second-steppers scrambled to trade up on their properties to avoid the 3% levy that was introduced on April 1st.
First-time sellers benefit
Such was the investors’ rush before the deadline that a trend in first-time sellers trading up by selling to first-time buyers developed at the bottom end of the market.
Investors looking to buy-to-let experienced a price surge as a result and witnessed an 8.6% increase in the second-stepper sector alone. This +£20,500 difference on houses with three or four bedrooms gave this sector the highest increase in year-on-year values in all sectors in the market.
The heightened activity at the bottom of the market seems to have caused a knock-on effect for the average prices in every sector.
The top of the market, in fact, saw an average increase of almost £10,000 on properties with four or five bedrooms, caused by the ripples of the April 1st stamp duty deadline.
First-time sellers at the other end of the market have been able to benefit from being forced to hold onto their first-time bought properties after the credit crunch due to dramatic falls in average house prices.
These recent increases mean that the Chancellor’s deadline worked in their favour and they were able to trade up quickly in light of the hunger from investors to secure buy-to-let properties on the lower rung.
New levy works in favour of first-time buyers
Now that the deadline has passed and the levy has been introduced, the demand from investors in the buy-to-let market has fallen dramatically.
This ultimately means that there is more opportunity for first-time buyers to get on the housing ladder at the bottom end of the market because there is less competition.
It also means that first-time sellers will, in some cases, need to reduce their asking prices to compete in a busy market of first-time buyers and future buy-to-let investors.
The knock-on effect of the buy-to-let stamp duty deadline is in its infancy and it remains to be seen whether or not this surge will continue much further beyond the usual Easter spike.
It does, however, represent the kind of opportunity for first-time buyers that we haven’t seen since the weeks and months following the credit crunch.
This post was written by Lauren Simpson