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These changes are set to benefit buy to let investors, second home purchases and portfolio landlords with significant tax savings, where the average house buyer would save £4500. It also opens up opportunities for buy to let landlords to transfer their properties over to a limited company structure and gain tax relief on their mortgage interest thanks to the absence of the usual stamp duty charges.

Significant Cost Savings

When looking at the predictions through a wider lens, things still look extremely promising. There is no stamp duty owed on any property purchased for under half a million pounds – with the average home in England worth £248,000, the benefits speak for themselves and the Treasury has estimated that nine out of 10 purchasers will pay no stamp duty at all.

The North East of England and certain parts of the Northern Powerhouse have the highest concentration of properties in this bracket and the best opportunities available for investors wishing to gain a double benefit – a buy to let investment in areas with increasingly high demand and low supply and a saving of £2,460 thanks to the absence of stamp duty.

For those purchasing a £500,000 property, the stamp duty holiday would mean a saving of £15,000 while any property purchased over the £500,000 mark will see their stamp duty costs reduced by £15,000.

The Three Per Cent Surcharge

It should be noted that the three per cent surcharge remains in place whereby investors and second home buyers must still pay a three per cent stamp duty charge on their purchases but no further duty will be owed on the first £500,000 of the property’s value. This would still mean a significant reduction in duty payable thanks to the higher nil rate.

The changes have been a long time coming as the taxation of landlords has been on the government’s agenda since 2016 when it was confirmed that mortgage interest relief would be gradually reduced and then withdrawn entirely. While the implementation of those changes and the tighter restrictions deterred some landlords from making further property investments, the UK property market remained strong and competitive thanks to solid evergreen credentials.

Market Revival

Now, the stamp duty holiday is giving the market another boost, which is especially welcomed after the dark shadow cast by the lockdown. During a time of great economic uncertainty, these latest changes represent a positive step forward and huge opportunity for landlords as this development is set to improve the supply of high-quality rental properties and tip the scales in favour of investors.

While much has been made about the potential disadvantages for first-time buyers, who now face fiercer competition from investors and second or third home buyers, this demographic will still benefit as increased movement in the market will see a wider range of homes available for purchase. On the day that the chancellor made his statement, Rightmove reported its busiest ever 24 hours with 8.5m visits – the highest in the 20 years since the website launched with enquiries up 93% on the same day in 2019. Zoopla also reported strong activity with a 29% increase in visits compared with the average for the previous 28 days. These changes have kickstarted the market and given a much-needed confidence boost to those at all stages of property purchase and investment for an overall stronger landscape.

Buyers across the board will also benefit from a stronger position in terms of qualifying for a mortgage as the reduction in stamp duty leaves a greater gap for a larger deposit. For investors, this increase in movement also means higher availability of quality property in sought after areas. Experts have predicted that the changes will revive the market and stabilise house prices to widespread benefit.

Energy Efficiency Rewards

The chancellor’s summer statement brought further positive news for property investors as the chancellor announced a range of measures designed to support landlords upgrading the energy efficiency of their homes. Set to be introduced in September, the scheme fills the gap left by the withdrawal of the landlords’ energy-saving allowance and rightfully rewards those homeowners who are consciously making a decision to operate a more environmentally friendly property portfolio.

While the full details are yet to come available, the scheme will offer the opportunity for landlords to apply for vouchers to cover at least two-thirds of the costs of improving their properties – for example, by installing loft insulation or double glazing.

Vouchers would come to a maximum value of £5,000, or more for low-income households. When we number crunch, this means households could save up to £300 a year on their energy bills, offering landlords another opportunity to improve the quality of their property and attract or retain good tenants.

A Stronger Economic Picture

This highlights another benefit of the stamp duty holiday – the cost savings here provide landlords with excess capital which they can then invest back into their homes to boost their competitive edge and attract a steady stream of tenants for a solid rental income. The stamp duty holiday is also set to have a positive knock-on effect on related industries such as house builders for an overall more solid economic landscape.

For more information on how to take advantage of the stamp duty holiday and gain access to the highest quality buy to let investment properties contact our team at Alesco today. We offer a combination of industry expertise and in-depth market knowledge to provide all of our clients with the highest quality prospects.