BTL stamp duty: onwards and perhaps upwards?
The increase in stamp duty for buy-to-let investors or second-home owners has caused a stir since it was announced by George Osborne that these properties would be subject to a 3 per cent hike in duty from April.
His announcement in the autumn budget boosted the property market initially as investors sought to buy houses before the stamp duty rise came into effect. However, in the long-term it could be bad news for the buy-to-let market as investors may be reluctant to pay out thousands of pounds more for a property. They may also increase rents to cover the additional costs.
The increase in stamp duty affects anyone who has two or more properties in England, Wales or Northern Ireland and is planning to either buy or sell.
The aim is to free up more properties for people to buy, but the reality is that many either cannot afford to get on to the property ladder or have realised they can live in a bigger home in a nicer area if they rent.
Where are the investments likely to be from April?
If a landlord needs a larger property, it could be prudent to look at extending a property he or she already owns. When you consider that the increase in stamp duty will cost thousands, it makes financial sense to invest that money into properties already owned, particularly if the property is in an expensive area to live such as London or the South-East.
Use your head and look at a loft conversion
A loft conversion can add as much as 20 per cent to the value of your home, according to a report by This Is Money.
For a buy-to-let property, it makes sense to add an en-suite bedroom in a terraced house or family house or a self-contained studio flat into a multi-occupancy property. A loft conversion in London will add value to the actual property, where space is at a premium, and bring in a higher rental income in the meantime.
A loft company in London will be able to advise on whether the loft space is suitable and how to go ahead with the conversion. Specialists like London’s loft company UK Smart Build can bring innovative ideas for extensions and conversions.
Going up could be more financially rewarding than moving out in the buy-to-let sector.