New research conducted by My Home Move indicates that the number of properties being purchased by investors has risen sharply since the introduction of the additional 3% stamp duty in April last year.
Figures back to 2014 show that the investment market has halved in volume since 1st April 2016. This indicates that landlords and additional home buyers have been reluctant to pay the additional charge.
Doug Crawford, CEO of My Home Move, said: ‘Even though a year has passed, the introduction of the Stamp Duty levy still remains controversial. On the face of it, the changes to Stamp Duty were presented by the Government as a tax that would affect greedy landlords-those who were snapping up properties away from first-time buyers. However in reality, people who buy additional homes aren’t just landlords with vast portfolios of properties, but parents looking to help their children while at university, or retirees wanting to buy themselves a holiday home.’
‘I’d argue that the Government’s tax play has affected individuals looking for a second property far more than the career landlord. If anything, the changes have resulted in money being redirected into gifted deposits, particularly for second steppers and middle movers,’ Crawford continued.
In the months preceding the Stamp Duty changes, gifted deposits made up roughly 8.4% of all purchase transactions. Once the law changed, data showed this rose to 9.3%, with so-called ‘second steppers’ and ‘middle movers’ the biggest beneficiaries.
Moving on, Crawford observed: ‘It would appear from the data, that while investors were choosing to back-off on buying additional properties, the number of gifted deposits was rising at a rate of around 1%; the equivalent of an additional 3,000 properties were bought using a gifted deposit in the six months after the stamp duty change.’
‘Our research has revealed that while ‘second steppers’ and ‘middle movers’ have always received the greatest number of gifted deposits, after the Stamp Duty change this number increased by 8% over the year. The Bank of Mum and Dad has once again had to step-in to help those struggling financially to move beyond their first home – a situation caused by the lack of housing stock and inflated property prices,’ he concluded.