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Buy to Let Market & Stamp Duty Holiday

November 04, 2020

UK Property Buyers Running out of Time

The UK’s stamp duty holiday is an important, limited-time price break for UK home buyers. If you’re considering buying a house or flat to rent out, you’ll need to get started soon.

The Stamp Duty Tax was temporarily removed during the government’s last economic update. It eliminated the harmful tax on sales of homes under £500k, which affects 9 out of every 10 homes sold.

The deadline for the holiday is March 31st, 2021.   The tax holiday has been a significant factor in boosting the UK housing market this year, and helping to keep the country’s economy from severe hardship.

Time Crunch hitting UK Housing Market

Because it takes quite a while to find a good rental property to let, and go through the full process of closing the deal, it means many buyers will have trouble finalizing a purchase before March 31, 2021. In addition, there are concerns about a backlog in surveyors, conveyancers and local council search departments.

All of this will impact the UK housing market, causing tax losses, not gains, and suppressing national GDP.

Buy to Let Market in UK Booms

The tax duty holiday spurred huge interest in buying to let purchases. Buyers had a glorious opportunity to buy properties to let, given the rental market has been so strong (outside inner-city London). The rental profit yields plus growing equity of UK homes for rent have been very rosy.

The rush to beat the tax is bringing pain to the market, and many hopeful buyers may not be able to get the tax break because of the lengthy time it takes now to close a real estate deal.

According to Hamptons International, the number of people registering to buy across the country was up by 38% on August last year, boosted by the stamp duty holiday.” — from report.

Buy to Let Mortgages

Buy to let property buyers can apply for BTL mortgages. Buy-to-let (BTL) mortgages are a little different than normal consumer mortgage loans, designed for financially stable landlords who want to buy property to rent it out.

You could qualify if you own a home, earn £25,000 per year, have a good credit rating, and are under 75 years old. The minimum deposit is about 25% of the loan, and fees and loan interest rates are typically higher for BTL loans.

If you sell your buy-to-let property for a profit, you may have to pay CGT if your gain is more than £12,000 (for the 2020/21 tax year). Fortunately, you can now receive a 20% tax credit for all of your mortgage interest on your buy to let mortgage loan.

Investigate buy to let possibilities in Northern England cities and towns as they have been generating the best ROI. This infographic below from show some solid buy to let yields in the north. Much of this may be single family homes for rent.

Screen capture courtesy of

Property Industry Professionals Get Together to Extend the Stamp Duty Holiday

A propertyindustryeye report said that property industry leaders have now sent a joint letter to the chancellor which was si gned by 14 trade bodies and property firms.

The concern they have is a “stamp duty land tax cliff edge on the 31st March” could result in a sharp decline in property sales.

With prices rising due to the renewed tax, it will be much less attractive for buyers to buy a rental property after March 31st.

Stamp Duty Holiday Market Boost Could End

Demand for homes across the UK has been on an upward trend due to the temporary reduction of Stamp Duty Land Tax (SDLT) as well as the termination of the existing Help to Buy scheme. They both end on March 31st, 2021.

The letter cites that the average property transaction time has increased from 12 weeks to 20 weeks. It asks the Chancellor to extend the SDLT end date by three months to near the end of June. The group also asks that the government should work with the industry to ease out of the stamp duty holiday to allow a smoother adjustment.

The bottlenecks and pressure on market participants and real estate professionals is a big concern. From estate agents, to search agents, mortgage intermediaries, conveyancing professionals, moving companies, property surveyors, to energy assessors and removal companies, industry business is being slowed.

Voice Your Opinion about the Stamp Duty Tax

Do you really believe the stamp duty is good for the UK?  Then you may want to voice your concern about the continuation of the stamp duty tax to your UK politicians and the Chancellor, and perhaps encourage an extension or to abolish the market killing tax.

British property managers will find even better rental yields by using a good property management software solution. By all means, do ask for a ManageCasa demo to see the full set of impressive features.


See also: Rental Listing Sites | Stamp Duty Holiday | Migration to Northern EnglandUK Rental Property Market | UK Real EstateSingle Family House Rentals | House for Rent | Rental House ManagementAdvertise Rental House | Property Management Software | Flats for Rent | Apartment Rental Prices | Best Cities to Buy Investment Property | Simple Property Management Software |  Best Property Management Software | How to Screen Tenants | Rental Listing Sites |  Property Management


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