I was talking to one of my portfolio landlords the other day as I was helping him to source another buy-to-let property when he mentioned something that made me think. He was complaining about the amount of additional Stamp Duty he had to pay (due to the increase in April 2016), which I have discussed in a previous article on this blog. This made me think about the other side of the property market who stood to benefit from the investors gripe..first-time buyers of course!!
There’s a whole legion of wannabe Walsall 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 Walsall landlords with cash at the ready. Since the start of April, buy-to-let landlords have had to pay an additional 3% stamp duty on their purchases so, whilst demand from some buy-to-let landlords has dropped away, in the interim, it offers first time buyers a chance to fill the vacuum with less competition from cash rich landlords – over two thirds of buy-to-let properties were purchased without a mortgage in the last 7 years – who could bid more and complete quicker.
As the average value of a terraced house in Walsall currently stands at £113,100, that means if our first time buyer went up against a landlord, the landlord would have to pay an additional £3,393 in stamp duty.
Early anecdotal evidence from fellow property professionals in the town is suggesting landlords are reducing their offers slightly on Walsall properties to reflect the extra stamp duty.
Whilst on the face of it, it appears landlords are being punished by 11 Downing Street, I actually believe this increase in stamp duty for landlords is a good thing for the Walsall property market as a whole.
Since 2011/12, the Walsall property market has performed very well indeed. Over the last 12 months,£812,397,356 has been spent buying 4,612 properties. Figures from the Land Registry have just been released and month on month in our council area, property values are 2.2% higher, yet 4.7% higher year on year. These figures are nowhere near the heady days of 2003 (April to be exact), when Walsall property prices rose by 34.2% in 12 months!
So, as property values in Walsall and the UK as a whole start to stabilise and come back to some kind of balance, I am beginning to see savvy landlords view the Walsall 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 Walsall Property Market Blog, take advice on what or not to buy and what to pay, meaning Walsall landlords are being more calculated with their investment purchases. I am also seeing a variance between relatively brisk current price momentum and softer expectations in terms of property value growth in Walsall, this in part reflects amplified uncertainty about the short term economic outlook (e.g. Post Brexit, issues in the Far East etc).
Now I know a lot of Walsall landlords brought forward their investment purchases to beat the stamp duty deadline. However, it is probable that hunger from Walsall investors will return for the right property later in the year, especially if it’s at the right price and offers a decent yield. However, in the meantime, first time buyers could and should, in the short term, make hay whilst the sun shines, plug the gap and grab a bargain!
Give me a call on 01922 311016 if you would like to chat about any aspect of the Walsall property market. I have been around it for almost 30 years now so I should know what I’m talking about!