A majority of buy-to-let investors are undeterred by the forthcoming stamp duty changes, new research has revealed.
According to specialist lender Shawbrook, 56% of investors are planning on purchasing a buy-to-let property within the next 12 months.
Of the 44% who are not planning on purchasing a new buy-to-let property this year, just over a third (37%) said it was due to the 20% cap on tax relief, whilst almost a fifth (16%) said the 3% extra stamp duty levy on second homes was putting them off.
Shawbrook questioned over 170 property investors and found that four in 10 plan to set up a limited company for their properties to counter the impact of tax changes, whilst a third (33%) plan to raise rents.
Stamp duty will rise by 3% for landlords and second home owners from 1 April as part of the government’s efforts to dampen the buy-to-let market and free up property for first-time buyers.
Under the changes, the stamp duty on a £250,000 buy-to-let property will rise from £2,500 to £10,000, while the rate for a £400,000 property will more than double from £10,000 to £22,000. The basic rate of tax relief landlords can claim on properties is also set to fall to 20% from April 2017.
Almost half (49%) of clients said they considered regulation to be the biggest challenge over the next six months, up from 23% last year.
Despite these challenges, six in 10 investors have a positive outlook for the upcoming 12 months, predicting either a large or small increase in property value.
In total, 43% of landlords saw an increase in tenant demand in 2015 and nearly two thirds (61%) saw an increase in their rental income. A further 44% are confident that their business will grow in 2016.
Karen Bennett, sales and marketing director of commercial mortgages, said: “As a lender it is always great to see such positivity in the market, and as with our Broker Barometer conducted in late 2015, it seems that there is a lot of optimism amongst property professionals also. Obviously the new changes will have an effect and may instil more caution across the market; however, Shawbrook is well-placed to adapt to change, and we are expecting the market to remain buoyant.”
