60% of multi-property landlords have expanded their property portfolios since the beginning of the Stamp Duty Land Tax (SDLT) holiday in July 2020, according to research from Direct Line for Business. With the average buyer saving £4,500 during the holiday, there is no surprise that landlords and property investors were strategic with their purchases.
The research from Direct Line for Business also shows that 43% of landlords have invested in properties outside major cities, with 82% doing this as a result of renters moving out of cities due to remote working and the COVID-19 pandemic. When questioned about the SDLT holiday, half of the landlords said they felt it had kept the property market afloat during the pandemic, with 43% saying it encouraged them to accelerate plans to purchase additional properties.
In the 2021 Budget announced Wednesday 3rd March, the Chancellor revealed an extension of the SDLT holiday until the end of June 2021. With 60% of landlords increasing their portfolio and purchasing property already to benefit from the average £4,500 tax savings, we expect to see the rush to expand BLT portfolios continue into the summer.
Even when the SDLT holiday ends, property investors and developers can still benefit for a short while from a decreased rate. The rates of SDLT will change first in July 2021 to:
- £250,000 for residential properties
- £150,000 for non-residential land and properties.
Which will change once more in October 2021 to:
- £125,000 for residential properties
- £150,000 for non-residential properties
The best time for property investors looking to expand their portfolio to purchase more property for BTL or sale is now. The SDLT holiday can mean significant savings, which can then be invested elsewhere in the property or future purchases. And with only first-time buyers looking to make any real savings beyond the latter end of 2021, property investors need to consider how their demographic can make the most of changing tax rates in the short-term.
The value of the SDLT holiday for landlords and property investors is clear, with 30% of landlords in the research admitting they are willing to cut corners to ensure their purchases are completed before the end of the holiday. This could include taking on aspects of the conveyancing process themselves or even skipping a thorough property survey. A further 75% of landlords said they would pull out of transactions if they did not complete the purchase before the end of the SDLT holiday.
Jamie Chaplin, landlord business manager at Direct Line, said: ‘it’s been encouraging to see the property market so buoyant since the stamp duty holiday was introduced. And it’s been interesting to see more landlords invest in rural properties, suggesting they’re responding to the rise of flexible working and the possibility of people leaving major cities to work remotely.’
It is not just the location of properties we see a change in, but the way landlords and investors are using their properties. Since the ‘start’ of the pandemic in March 2020, 36% have changed their type of let:
- 14% have listed their property as a holiday home, short-term let or Airbnb
- 14% have changed their property to a bed and breakfast
- 11% have changed commercial property to residential
- 7% plan to make changes in the future
It’s clear that now is time for action by landlords and property investors. With the extension of the SDLT holiday, giving more time to complete purchases, landlords and investors can grow their portfolios without the risk of paying thousands in tax. But, they need to make sure they consider the location and use of their properties as renters behaviours and desires have changed due to the COVID-19 pandemic. To find out more about how the 2021 Budget will affect you as a property investor, developer or landlord, read our blog here.