What's Going to Happen Tomorrow?
3rd April 2016
... Comments

Maybe it was all an April Fools’ prank from George Osborne, but assuming that isn’t the case; why might the 1st April 2016 go down as a particularly unhappy day for many?
I am of course talking about the additional 3% stamp duty charge for second homes and buy-to-let purchases, which comes in to effect from today.
It was only in the Spring Budget a couple of weeks ago that some of the previously unanswered questions were addressed, but still the new rules drag many into paying the additional charge that you might not expect. Some parents helping their children on to the ladder as well as those with second homes anywhere in the world will be penalised whenever they move home.
As for landlords, they will have to pay the taxman an additional £5,520 if buying the average priced (£184,000) buy-to-let property. Meanwhile, here in Chichester, there will be an additional £10,132 stamp duty to pay on top of the £6,887 already due, based on an average property purchase price tag of £337,736 locally.
The question remains as to whether we will see prices drop by 3% to absorb this tax increase or whether owner-occupiers will take up the reigns whilst investors simply have to take it on the chin?
Some say that in a years’ time it will simply be the norm and that in the scheme of things, a 3% one-off charge will pale into insignificance over the long-term (it’s taken just four months for prices to increase 3% in Chichester).
I however question whether there is enough demand from owner-occupiers in Chichester who have the (minimum) 10% deposit (£33,774 average in Chichester) to replace these investors. This, at a time when we have seen the proportion of private renting in Chichester increase from 8.5% of households to 12.8% in a decade (which is still below the national average).
The real sting in the tail that I fear many will face today due to this legislation will be the sudden collapse in their property sale or onward purchase. Having spoken to local estate agents and solicitors, there are many sales agreed with the caveat that it either completes by the 1st April or the buyer will pull out.
There could be a lot of vendors unwittingly affected by this, either directly or indirectly by a transaction elsewhere in the chain that could scupper proceedings. I think there will be a spike in properties coming back on the market, which could yet offer a glimmer of hope to those looking to buy.
If, on the other hand, you have just completed on a buy-to-let purchase before todays ‘deadline’ and are now looking for tenants or someone to manage the property for you, please get in touch to see if I can help.

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