Investors are facing a significant opportunity as the stamp duty deadline approaches next April.
- The stamp duty rate for properties between £125,001 and £250,000 will increase from 5% to 7%.
- Current stamp duty thresholds, set during 2022, will revert to prior levels, impacting property purchase costs.
- Investors can realise substantial savings by purchasing properties under £250,000 before April’s deadline.
- The regional property market offers potential savings and rental yields, particularly outside London.
Investors are presented with a crucial opportunity due to the upcoming stamp duty deadline in April, necessitating immediate action for potential savings. As next year’s deadline approaches, properties priced between £125,001 and £250,000 will see an increase in stamp duty rate from 5% to 7%. This change requires investors to swiftly conclude purchases to benefit from the current lower rates.
Former Chancellor Kwasi Kwarteng’s decision in September 2022 temporarily elevated the nil rate stamp duty threshold to £250,000. However, beginning April, this will revert to its previous state, demanding a 2% stamp duty on properties within the stated range if it concerns a primary residence. This presents a unique window for those investing in buy-to-let and holiday homes, as they are obliged to pay an additional 5% on top of the residential rate.
For first-time buyers, properties under £425,000 currently enjoy no stamp duty, but this threshold will decrease to £300,000 in April. Investors targeting buy-to-lets or holiday properties face notable savings by purchasing under the £250,000 mark before the deadline. For example, acquiring a £240,000 property before April could avoid an extra £4,800 in stamp duty.
Despite the average buy-to-let property in the UK slightly exceeding the threshold, regions outside London typically offer more affordable options. Zoopla data highlights that areas like the North East exhibit average buy-to-let prices of just £109,072, yielding 7.65%. Even regions with typically higher prices, such as the South West, often maintain averages just below the threshold, presenting viable opportunities for investment.
Investors who proactively engage with the lower stamp duty threshold may have additional funds for property improvements to meet the impending 2030 EPC requirements. Lower purchase prices also assist investors struggling with affordability, providing a pathway to improved financial management amidst higher repayment demands.
The impending changes, while well-publicised for first-time buyers, might catch some investors off-guard, particularly expatriates. UK properties remain attractive to expats seeking UK-based income sources, with cities like Blackpool and Manchester offering yields above 6.50% and property prices under £200,000.
Specialised underwriting and personalised investment strategies continue to support diverse investors. For example, a first-time landlord secured an 80% LTV mortgage for a flat outside London, highlighting the viability of regional investments with bespoke financial solutions. Engaging with clients via modern communication methods ensures awareness and readiness ahead of changes.
As the realisation of these stamp duty amendments grows, heightened competition in the buy-to-let market is anticipated, further underscoring the urgency for investors to act.
Investors stand to gain significantly by acting promptly to benefit from the current stamp duty thresholds before they revert in April.
