Most of the focus on the stamp duty cut has fallen on how it will help buyers’ step on the property ladder. This is important, because when buyers benefit by saving money, it provides vendors with confidence.
However, the stamp duty measure also impacts landlords. While the cut will help some tenants step on the property ladder, there is still going to be a significant level of demand for rental property. Landlords shouldn’t be negatively affected by this measure.
It is also important to note that landlords will find property more affordable while the stamp duty measure is in place. Yes, landlords and property investors still have to pay the additional 3% SDLT when buying property, but they benefit from the stamp duty cut.
Landlords can improve their rental yield
This will help landlords lower the amount of money they spend in buying property, and this should help them achieve a more appealing rental yield.
According to Zoopla, as at the start of August 2020, the average price paid for property in Ramsey (over a 12-month period) is £229,492. With the stamp duty holiday in place, buyers will pay no SDLT on this property. This represents a saving of more than £2,000.
However, landlords will have to pay £6,884 because of the additional tax. Without the stamp duty measure in place, landlords would have to pay £8,974.60, so again, there is still a saving of more than £2,000 for the landlord or investor; which might make all the difference to a landlord looking to expand their property portfolio.
The average price paid for property in St Ives is £370,347. Again, a property buyer pays no stamp duty on this purchase, saving £8,517.35.
Stamp duty holiday can help landlords justify costs of property investment
A landlord buying at this price, until the end of the stamp duty holiday, pays £11,110. This is a significant sum, but without the stamp duty holiday, a landlord would pay £19,627.76, so there is a saving of more than £8,000 to be made here.
The same pattern is repeated across the country, with landlords having the chance to lower the cost of buying property.
This is a challenging time for many people, and there will be many landlords who are focused on keeping their business running without worrying about expanding their portfolio. This is understandable, and if you need any assistance in managing rental property, we are here to assist you.
However, we appreciate there will be some landlords in a position to expand their property portfolio, particularly when you consider the savings available when buying before the stamp duty deadline.
If you are a landlord looking to invest in property, Thomas Morris is here to help, and we have a range of branches ready to assist you.
If you are looking for help with any matter of the property market, it is best to speak to property professionals. You can book a sales or rental valuation appointment directly on line at a time and date of your choice by clicking here or alternatively click here for individual branch contact details.