May 25, 2016
There’s a whole legion of wannabe Chiswick first-time buyers keen to get on the property ladder and they now have a 3% price advantage over the previously quicker responding army of Chiswick landlords with cash at the ready. Since the start of April,
buy to let landlords have had to pay an additional 3% stamp duty so whilst demand from some Chiswick buy to let landlords has dropped away, in the interim, it offers Chiswick first time buyers (FTB’s) a chance to fill the vacuum with less competition from cash rich landlords (over two thirds of BTL properties were purchased without a mortgage in the last 7 years) who could bid more and complete quicker.
Looking at the average value of an apartment in Hounslow
currently standing at £258,100, that means if our Chiswick FTB went up against a Chiswick landlord, the landlord would have to pay an additional £7,743 in stamp duty. Early antidotal evidence from fellow property professionals in the suburb is suggesting landlords are reducing their offers slightly on Chiswick properties to reflect the extra stamp duty.
Whilst on the face of it, it appears landlords are being punished by No.11 Downing Street, I actually believe this increase in stamp duty for landlords is a good thing for the Chiswick property market as a whole.
Since 2011/12, the Hounslow property market has performed very well indeed. Over the last 12 months, £187,565,488 has been spent buying 556 Hounslow properties. Figures from the Land Registry have just been released and month on month in our council area, property values are 1.8% higher, yet 14.7% higher year on year. These figures are nowhere near the heady days of 2000 (June to be exact), when Chiswick
property prices rose by 28% in 12 months.
So as property values in Chiswick (and the UK as whole) start to stablise and come back to some kind of balance, I am beginning to see savvy landlords view the Chiswick property market in a different light. Even with the Spring rush, gone are the days where you could make limitless money on anything that had a door, a few windows and roof. This stamp duty change has made more and more landlords, after reading the Chiswick Property Market Blog take advice on what or not to buy and what to pay, meaning Chiswick landlords are being more calculated with their Chiswick BTL purchases. I am also seeing a variance between relatively brisk current price momentum and softer expectations in terms of property value growth in Chiswick, this in part reflects amplified uncertainty about the short term economic outlook (eg Brexit, Issues in the Far East etc).
Now I know a lot of Chiswick landlords brought forward their BTL purchases to beat the stamp duty deadline. However, it is probable that hunger from Chiswick investors will return for the right Chiswick property later in the year, especially if it’s at the right price and offers a decent yield. However, in the meantime, Chiswick FTB’s could and should, in the short term, make hay whilst the sun shines plug the gap and grab a bargain!