The beginning of the end of BTL?
With just three weeks to go until Chancellor George Osborne's 3% stamp duty hike on buy-to-lets and second homes kicks in, new research by property crowdfunding platform Property Partner makes for sober reading.
Nearly six-in-ten (59%) landlords surveyed say they are shelving plans to make further investments in traditional buy-to-lets, or are even planning to sell some of their existing properties.
Surprisingly, given the extensive media coverage, many landlords still seem unaware of the full implications of the combined government measures about to be implemented. Tougher mortgage lending rules kick in on March 21, quickly followed by April’s stamp duty hike, with mortgage interest tax relief being phased out from 2017.
Yet 27% of landlords surveyed by Property Partner, had little or no awareness of the radical changes to their financial fortunes in the pipeline.
Landlords are split down the middle. While 41% of those questioned say they plan to continue buying properties for rent, almost the same proportion (38%) say they are switching strategies - still investing in residential property, but through crowdfunding platforms like Property Partner instead.
Property Partner has seen a surge in investment on their platform as investors look for alternative ways to invest in property. It’s largest crowdfunding raise to date, a £2.4m modern development in Hastings, East Sussex, completed with a record 1191 people investing in shares in the property. Meanwhile, Property Partner’s unique resale market, it’s “property stock exchange”, saw a 77% increase in shares traded between January and February.
Dan Gandesha, CEO of Property Partner, commented: “On the evidence of our research, landlords are deeply divided over how to respond to the government’s clampdown on buy-to-let.
A significant minority are desperately buying up available stock to beat the April stamp duty deadline, causing a surge in prices. Do these people really understand how the government’s tax changes will impact their profits? Luckily the majority of landlords are taking a much more cautious view, with many choosing Property Partner as a better way to access residential property investment, without the hassle, expense, or tax implications.”