One of the biggest challenges in the property market, and the rental market, is demand outstrips supply. The demand for homes across London has played a significant role in rising prices. This is as true for the rental market, and many local landlords and property investors would buy even more property if they could afford to.
The stamp duty holiday, introduced in July of 2020, is already impacting demand for homes. Given the savings on offer, it is no surprise to see many prospective buyers snapping up property in the capital, but this saving might also entice many landlords to enhance their property portfolio.
There has already been an uptake in the number of mortgages being approved, and this is set to continue over the next few months.
Information provided by the Bank of England indicates lenders approved 66,281 home loan agreements in August of 2020. This was a notable increase from the 39,902 approvals which took place in June.
With the stamp duty in full effect, it is expected many more mortgages will be applied for, and approved, in the coming months. There will be many people looking to be owner-occupiers in their new home, but it is also like there will be an increase in buy to let properties.
While landlords have to pay the additional surcharge when buying properties to let, they benefit from the stamp duty holiday. It is easy to see why this sort of saving will appeal to many landlords, especially landlords in London.
The stamp duty holiday should lower the cost of buying property in London by around £10,000 to £15,000 depending on the location, size and condition of the property. Saving up to £15,000 is a great outcome for many landlords, and it will provide letting professionals the opportunity to lower their costs, and hopefully improve the expected rental yield.
John Goodall is the CEO at Landbay, and he said; “This trajectory of increasing house purchases is what we would have expected as lockdown rules continue to be relaxed. The stamp duty holiday has clearly given the boost needed to encourage people to buy again although there is inevitably an amount of caution both from a health and a financial point of view.”
Goodall also said; “While we are yet to see the effect the end of the furlough scheme will have on residential purchases, I expect the number of transactions to continue to recover for the rest of this year and the first quarter of 2021, particularly in buy-to-let, as the demand for rental property continues to increase.”
We know these are challenging times for the property market. At Love Your Home, we are keen to maintain a high standard of service for all our clients. As well as helping people now, we will review the changes likely to occur in the market. If you are looking to stay informed, rely on Love Your Home.