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NI investors bid to beat the budget with buy-to-let

Posted on 19 January 2016
NI investors bid to beat the budget with buy-to-let

3% hike in Stamp Duty for second homes from April 1st

The rush is on for investors purchasing buy-to-let properties in Northern Ireland to beat the extra 3% of stamp duty levy being introduced for second homes and additional property purchases here in just over two months’ time.
The new charge will impact on anyone purchasing an additional residential property in the UK worth over £40,000, and could cost potential landlords thousands of pounds in extra charges once the increase is put in place this April, with one of Northern Ireland’s longest established local Estate Agencies saying they’ve noticed an increased surge to complete property purchases in the rental sector before the end of the financial year.

Neil Templeton, Director at Templeton Robinson which has five branches across Northern Ireland, says traditional areas of high rental demand in Belfast such as the Holylands, Donegal Road and Lisburn Road are seeing increased activity as investors race to complete ahead of the new charges, which will have a financial impact on new property purchases.

“A buyer paying, say, £135 000 for a buy-to-let property will only pay £200 before the 1st April, but £4250 afterwards. This increase is equivalent to the cost of a new kitchen or possibly six months rental income, and could well result in a “spike” in transactions on holiday homes and investment properties over the next month or so as people try and complete under the old system.

“In the longer term, after an initial lull and bedding-in period, we would expect to see a stabilisation in these residential sectors. However, it remains to be seen if this tax hike will have an adverse effect in popular areas for the rental and second or holiday home markets.”

With around 10 weeks to go before the changes are implemented, there is still time to beat the budget but for purchasers relying on a mortgage to secure new properties for the rental market, the process may take longer, as Neil explains.

“We are finding it is currently taking an average of around eight weeks to complete a purchase from the date a sale is agreed. Some lenders are quicker than others though, but a word of warning that there do tend to be a few more hoops to jump through with buy-to-let mortgage applications than residential ones. On the other hand, cash transactions with vacant possession can complete as quickly as four weeks if you have an efficient solicitor and estate agent at the helm.”

“While the new SDLT (Stamp Duty Land Tax) regulations may make some potential buy-to-let purchasers think twice regarding the additional expense, the continued low interest rates coupled with increasing numbers of mortgage products becoming available mean that many still see residential property as a sound investment in comparison with other areas to invest your money.”