There’s a whole legion of wannabe Northampton first-time buyers keen to get on the property ladder and they now have a 3% price advantage over the previously quicker responding army of Northampton landlords with cash at the ready. Since the start of April, buy to let landlords have had to pay an additional 3% stamp duty so, whilst demand from some Northampton buy to let landlords has dropped away, in the interim it offers Northampton first time buyers (FTB’s) a chance to fill the vacuum with less competition from cash rich landlords (over two thirds of BTL properties were purchased without a mortgage in the last 7 years) who could bid more and complete quicker.
Looking at the average value of a terraced house in Northampton, currently standing at £158,900, that means if our Northampton FTB went up against a Northampton landlord, the landlord would have to pay an additional £4,767 in stamp duty. Early anecdotal evidence from fellow property professionals are suggesting landlords are reducing their offers slightly on Northampton properties to reflect the extra stamp duty.
Whilst on the face of it, it appears landlords are being punished by No.11 Downing Street, I actually believe this increase in stamp duty for landlords is a good thing for the Northampton property market as a whole.
Since 2011/12, the Northampton property market has performed very well indeed. Over the last 12 months, £1,058,533,008 has been spent buying 4,728 Northampton properties. Figures from the Land Registry have just been released and, month on month in our council area, property values are static at 0%, yet 7.2% higher year on year. These figures are nowhere near the heady days of 2003 (January to be exact), when Northampton property prices rose by 24.9% in 12 months.
So as property values in Northampton (and the UK as whole) start to stablise and come back to some kind of balance, I am beginning to see savvy landlords view the Northampton property market in a different light. Even with the Spring rush, gone are the days where you could make limitless money on anything that had a door, a few windows and roof. This stamp duty change has made more and more landlords, after reading the my blog, take advice on what or what not to buy and what to pay, meaning Northampton landlords are being more calculated with their Northampton BTL purchases. I am also seeing a variance between relatively brisk current price momentum and softer expectations in terms of property value growth in Northampton, this in part reflects amplified uncertainty about the short term economic outlook (eg Brexit, Issues in the Far East etc).
Now I know a lot of Northampton landlords brought forward their BTL purchases to beat the stamp duty deadline. However, it is probable that hunger from Northampton investors will return for the right Northampton property later in the year, especially if it’s at the right price and offers a decent yield. However, in the meantime, Northampton FTB’s could and should, in the short term, make hay whilst the sun shines, plug the gap and grab a bargain!