Landlords to continue expanding portfolios after stamp duty holiday

Landlords to continue expanding portfolios after stamp duty holiday
Credit: Gareth Fuller/PA Wire

The end of the stamp duty holiday will not prevent landlords from adding to their portfolios, research from Foundation Home Loans suggests.

A December/January survey of 846 landlords found one in six (16 per cent) said they were going to buy a property over the next 12 months.

Of those who intend to purchase this year, 48 per cent said they would do so in the first quarter, 41 per cent in the second, 28 per cent in Q3 and 29 per cent in Q4.

The lender’s research also found only 4 per cent of respondents said they were purchasing because of the stamp duty holiday.

George Gee, commercial director at Foundation Home Loans, said: “As we know landlords think long and hard before adding to their portfolios and, as our research reveals, they are unlikely to just confine any purchase activity to the first quarter of this year in order to simply benefit from the stamp duty holiday.” 

Meanwhile, a quarter of landlords intending to buy a property this year said they were holding off as they believed property prices were currently inflated.

Annual house price growth was at 6.4 per cent in January, according to Nationwide’s house price index, and had slowed for the first time in six months as the market approached the stamp duty holiday deadline.

Gee added: “Looking beyond Q1, there will clearly be ongoing opportunities for advisers active in the landlord borrower space, and all the signals point to significant activity taking place in both the purchase and remortgage sectors.

“We should not forget that many landlords’ special rates are coming to an end over the months ahead, especially those that bought prior to the last stamp duty surcharge increase for additional homeowners back in Q1 2016.”

The Intermediary Mortgage Lenders Association has also predicted that the five-year anniversary of the surcharge will enable demand in the mortgage market to stay strong this year despite the end of the stamp duty holiday.

Mark Harris, chief executive of SPF Private Clients, said: “Property is a long-term investment strategy for landlords, particularly the more serious investors, and the end of the stamp duty holiday will not impact those plans.

“While it is always nice to ’save’ money and not paying as much stamp duty as otherwise is always welcome, there are more considered reasons for investing.

“With stocks and shares proving volatile, and cash producing little, if any, in the way of returns, bricks and mortar is the obvious choice for many investors. Property is tangible, you can see it, feel it and understand it in a way that cannot be said of other investments.”

Andrew Brown, managing director at Bennison Brown, said he had seen a resurgence in buy-to-let purchases that one might assume is related to the stamp duty holiday, but that there were many other factors at play.

Brown cited low interest rates, new landlords entering the market who were keen to upsize but retain their current property with a let-to-buy mortgage, as well as the possibility of a new generation of landlords who were “more accepting” of the stamp duty surcharge and how profits are taxed.