A lot like a Pac-Man gobbling up dots, investors have been hoovering up properties in recent months.
In November, one in seven house sales in the UK were by investors, according to estate agency Hamptons International. This was the highest market share in four years.
It wasn’t meant to be this way: Government policy has for years been designed to squeeze out property investors in favour of first-time buyers getting on the housing ladder. An onerous tax regime combined with a stamp duty surcharge and policies that gave first-time buyers a competitive edge saw landlords drop out of the market, faced with unsustainable bills.
For a while this worked, and first-timers made up the biggest proportion of buyers.
But now, the pandemic has turned it on its head – and it is largely down to Government policy. Many analysts were surprised that the stamp duty holiday was extended to investors and second home buyers too, who get the same discount as everyone else, paying just the three-percentage point surcharge.
This cancelled out first-time buyers’ previous advantage, being the only group to pay lower rates of stamp duty, at just the time when they needed it the most. And it meant a cocktail of circumstances – of a credit crunch hitting first-time buyers, rising levels of unemployment and a tax windfall for landlords – put the power back with investors.
Hamptons’ research also suggests that it is small-scale landlords who are selling up, with bigger investors snapping up the homes. Many of those leaving the sector are doing so as a result of the Government’s anti-landlord policy, largely amateurs with one or two properties that acted as a nest egg or pension. They could not make the sums add up, either with the tapering of mortgage interest relief or due to a loss of rental income as their tenants struggled in the pandemic.
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