Has Stamp Duty made property investment untenable in London and the south East?

by Readers Question

14:26 PM, 18th April 2017
About 2 years ago

Has Stamp Duty made property investment untenable in London and the south East?

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Has Stamp Duty made property investment untenable in London and the south East?

Having recently handed over a small fortune in stamp duty on the purchase of two properties in London, I’m curious to know how other property investors are dealing with the stamp duty levy.

I appreciate that this may be an issue that affects London and south-east purchasers to a greater extent, but I am surprised that I have not read more about this on this sites forum.

Even with the current poor yields in London, I am looking to extend my portfolio, but given the stamp duty on high London prices, often the tax that I would end up paying eats into almost the first 2 to 3 years worth of rental income.

I am wondering how others are coping with this issue.

Jim



Comments

Neil Patterson

14:30 PM, 18th April 2017
About 2 years ago

Hi Jim,

Yes in purely cash terms the 3% Stamp Duty surcharge will cost more in higher value areas. However, as a percentage change it is an even greater increase for lower value properties, so it is an interesting question for all areas.

We have discussed many times who it effects, but not the repercussions other than on the number of property transactions.

Old Mrs Landlord

15:45 PM, 18th April 2017
About 2 years ago

My husband and I briefly considered buying another two-bedroom house. We might have been able to get a dated and neglected one for £150,000, certainly no less. However we worked out that the stamp duty for us would be ten times what it would be for a residential buyer and about eighteen months' rent or two years' pre-tax profit - a powerful disincentive. I hope a first-time buyer got it but not sure many would be prepared to do the work needed. However this is in the South West not the area you refer to, as I imagine is self-evident from the price.

Paul Mullally

9:31 AM, 19th April 2017
About 2 years ago

I always apply the rule that you "make your money when you buy", so as long as the numbers still stack up, I just factor in the increased SDLT.

If the numbers are too close, then don't buy. It is still a strange market out there!

Donovan White

15:16 PM, 21st April 2017
About 2 years ago

"Even with the current poor yields in London, I am looking to extend my portfolio, but given the stamp duty on high London prices, often the tax that I would end up paying eats into almost the first 2 to 3 years worth of rental income.I am wondering how others are coping with this issue."

Hi Jim, have you considered investing outside of London? They are far greater, better and faster option to recoup a consistent rental income from investing outside of London. Leave me a reply if you are interested to know more. Always happy to help. Thank you (you are all welcome to enquire).

amir mahdavi

10:57 AM, 22nd April 2017
About 2 years ago

People worry too much about the detail that they miss the big picture. Before 1st April people bought properties over value just to save 3%. Now the tax increase, whether we like it or not, will increase supply from landlords due to mortgage relief changes, and will reduce demand due to 3% stamp duty rise. So the values will naturally fall, or at least not increase as much as they would have, without these changes. So in effect, a lot of us should be happy. Especially if you have 15+ properties in a company where you are not even impacted by this.

Amir

https://www.rentorest.com/
https://www.facebook.com/rentorest/


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