Is the stamp duty hike driving the property auction market?
Property auctioneer, Auction House, believes that the impending stamp duty hike due to come into force in April has been a major factor behind a record rise in lot entries this month.
Auction House says that 703 lots have been entered in its first round of auctions between 28 January and 26 February - a 13% rise compared to the same period last year.
Founding Director, Roger Lake said: “The Chancellor’s introduction of an additional 3% stamp duty for investors and second-home owners has sent an adrenaline rush through the market. We have worked hard to publicise the short window that he created for sellers and buyers, and this has certainly helped boost entries into our February auctions.
Whilst the precise details won’t become available until the Budget is unveiled next month, canny purchasers are realising that buying now prevents them being caught out by the tax surcharge, whatever form it may take.”
Recent reports have suggested that buy-to-let landlords are poised to sell 500,000 homes in the next year, followed by another 100,000 expected to be sold each year until 2021.
Roger Lake added: “I’m not convinced that the number of properties hitting the market will be quite as high as the reports suggest. But two things we know for sure: that the tax rise will come into place from 1 April 2016, and that properties will need to have completed by this date - not simply to have exchanged - to avoid the higher rate. With the Budget scheduled for 16 March, that gives us a mere two weeks between having certainty of the details and the changes coming into effect.
Nevertheless, our February auctions provide a chance for buyers to guarantee beating the stamp duty hike in a climate of low interest rates, with those selling benefitting from strong demand, lively bidding and a higher hammer price.
Early March sales with shortened completion periods can also deliver purchases at the old Stamp Duty rates - but sellers will need to act quickly to capitalise on the opportunity.”