The number of investment properties being bought in the UK has halved since April 2016 when an additional 3% stamp duty was put on buy to let properties and second homes, new research has found.
Bu the percentage of gifted deposits rocketed immediately after the stamp duty change came into force last April and remained strong for the following six months, according to the research from mover conveyancing services firm My Home Move.
Figures dating back to 2014 show that the once buoyant investment market has halved in size since 01April 2016, as landlords and additional home buyers have turned their backs on paying the additional 3% stamp duty charge.
Doug Crawford, the firm’s chief executive officer pointed out that the extra 3% charge was introduced by the Government to stop buy to let landlords snapping up properties usually bought by first time buyers but in reality, people who buy additional homes aren’t just landlords with vast portfolios of properties, but parents looking to help their children while at university, or retirees wanting to buy themselves a holiday home.
He believes that the tax has affected individuals looking for a second property far more than landlords. ‘If anything, the changes have resulted in money being redirected into gifted deposits, particularly for second steppers and middle movers,’ he said.
The research shows that in the months leading up to the Stamp Duty changes, gifted deposits accounted for around 8.4% of all purchase transactions but once the law changed there was an increase to around 9.3% with second steppers and middle movers becoming the largest group to benefit.
‘It would appear from the data, that while investors were choosing to back off on buying additional properties, the number of gifted deposits was rising at a rate of around 1%, the equivalent of an additional 3,000 properties bought using a gifted deposit in the six months after the stamp duty change,’ Crawford explained.
‘I suspect it is parents, those who ordinarily would have bought a second home, who have redirected their savings towards their children to help them onto, and up, the property ladder.
The Bank of Mum and Dad has once again had to step in to help those struggling financially to move beyond their first home, a situation caused by the lack of housing stock and inflated property prices,’ he added.